tv Public Affairs CSPAN February 26, 2013 1:00pm-5:00pm EST
kickbacks, he responded that he couldn't remember any. then he and the administration made it clear that they had no intention of providing documents that might refresh his recollection and shed light on whether he was involved in those kickbacks. clearly these questions don't matter to them because they think they have the votes, but transparency and sunlight are essential for congress and for the american people. if mr. lew will not answer our questions now, why should we on this committee expect him to answer any questions if he's confirmed? that's unacceptable and for these reasons i and for these reasonsly vote no on the nomination. . fed chair ben bernanke says the federal reserve's low interest rate policy is providing key
support to the economy. he delivered the fed's semiannual report to a senate committee today. tomorrow morning he will testify before the house financial services committee. c-span 3 will have live coverage and that will get under way at 10:00 a.m. eastern. here is part of his testimony earlier today before the senate banking committee where he urged the senate to take action to avoid a sequester. >> before we proceed with today's hearing, after we have a quorum, the committee will briefly meet in executive session to adopt the committee rules of procedure. our budget resolution for the 113th congress and new committee and jurisdiction. neither i nor ranking member has any amendments to the current committee rules. i note for my colleagues that we have been a part of the senatewide bipartisan process over the last several months to
conform to some aspects of our nominee committees -- committees to certain standard questions to be asked of all nominees to all committees. that integration process is still ongoing so ranking member and i have agreed to withhold for now and proposing -- on proposing any changes to the current committee questionnaire until we have worked that all out. now, are there any members who wish to offer an amendment before we moved to a vote. if there are no amendments -- i
secretary of the treasury and his responsibilities under dodd-frank. this would simply amend the committee rules and ask under the rules the chairman to invite any nominee to that position starting with mr. lew to testify before this committee. it would not involve any sort of vote regarding the nomination. it would involve full testimony akin to the testimony he gives before the other committees like finance. >> i understand the senator's interest in inviting jack lew to testify before this committee. i did not think it was necessary to amend the committee rules to accomplish that goal. i think such a permanent rules change would be a mistake and i intend to oppose it. first, i share the senator's interest in the hearing
formerly from mr. lew on a range of issues and have made clear i intend to invite him to come before the committee soon after he's confirmed. this committee, which has a primary jurisdiction over his nomination, has vetted him -- held a confirmation hearing on him and plan to act on his nomination this morning. second, i don't think we should start down the path of trying to amend the committee rules ding on our individual preferences for particular hearings. that's why we have an orderly process where our -- where i consult with the ranking member and other members on hearings -- [inaudible] and other matters. third, i'm concerned that amendments are rules in this way could spark jurisdictional disputes over nominees with other committees.
no other senate committee has such a rule. >> mr. chairman. i'm sorry. >> finally -- as drafted, this -- the proposed rule's change sun workable since the committee does not formerly receive the nomination -- formally receive the nomination on any of the related forms, we cannot -- [inaudible] confirmation hearing rules on such a nominee. i urge my colleagues to oppose this amendment. >> mr. chairman, if i could respond briefly and maybe suggest a middle ground. first of all, i do think a formal rules change is appropriate because of dodd-frank and the enormous significance of the treasury secretary to matters under the direct jurisdiction of this committee. and that's a permanent change. but be that as it may, i would be happy to withdraw this amendment if the chairman would invite mr. lu to testify for -- before his confirmation vote.
>> the president is already moving but will ensure the senator that i will invite him as soon as the confirmation is complete. >> ok. i'll take that as a no but i'd love a vote on my amendment. >> if there's no further debate, the question occurs on the amendment. all those in favor say aye. >> mr. chair, if i could ask for a roll call vote. >> the clerk will call the roll.
>> mr. chairman. >> yeah. >> if i could just ask a question. i'm understanding that you will invite mr. lu and he will -- he's agreed to come and the only debate we have right now is when you want to be for? >> correct. >> and since we don't have jurisdiction in this committee, i just want the information. it doesn't matter to me whether i get it before or after as long as i get the information i need. >> unless you're going to be using it against his confirmation. >> i think it would be useful to have the discussion since we all have a vote on the floor. i think it would obviously be useful to have the discussion before that vote. >> i would say that if you're going to find out if you're going to vote for him or not for confirmation, we're all allowed to attend the finance hears, correct? >> we're not allowed to ask questions. >> yeah. but, i mean, i'm sure he'll come and talk to you like he talks to everybody else beforehand.
i just don't -- you're not blocking him coming here, right, mr. chairman? you want him to come and talk to us. >> yes, i do. >> so, thank you, sir. >> anybody else? the clerk will call the roll. >> mr. chairman. >> no. >> no. >> no. >> no. >> no. >> no. by proxy. >> no. >> no. >> no by proxy. >> no. >> no. >> no. >> aye.
>> aye. >> aye. >> aye. >> aye by proxy. >> aye. >> aye. >> aye by proxy. >> aye. >> aye. >> the vote is -- [inaudible] the measure is defeated. >> with that, the amendment is not agreed to and i now move for approval en bloc by voice vote, the committee rules and procedures, the budget resolution for this congress and the applying for subcommittee membership and jurisdiction agreed to with ranking member crapo. all those in favor say aye.
those opposed, nay. in the opinion of the chair, the ayes have it. these documents are approved en bloc and the committee budget resolutions are reported. i ask the unanimous consent that -- [inaudible] be allowed to make any technical changes and that the current rule be waived. hearing no ox, it is so ordered. i -- objection, it is so order. i thank my colleagues for their corporation. now we will move to the hearing. ordered. i thank my colleagues for their cooperation. now we will move to the hearing.
today's hearing is with chairman bernanke on the federal reserve monetary policy report to congress. while progress towards maximum unemployment has been slow, it has been positive and steady, thanks in part to the feds thoughtful and measured monetary actions. our economy is adding private sector jobs for 35 straight months. during that time, over 6 million new jobs have been created, but we should not sacrifice those gains by slamming on the brakes
now. automatic spending cuts will take effect in just a few days and could send our economy into reverse at a time we should continue moving forward on creating jobs. projections suggest that the sequester will cost us 750,000 jobs this year. in addition to layoffs for cops, firefighters, and teachers that could devastate our communities, these cuts will impact many of our nation's most vulnerable citizens, including kids, seniors, and the disabled at a time when the u.s. faces an array of national security threats. sequester will effect military readiness. it is unacceptable we launch from one manufactured crisis to the next and americans have had
enough. these are bad for the economy and make it harder for families to make ends meet. steep drops in consumer confidence during the fight over the debt limit and the fiscal cliff, the fallout, after layman brothers failure and 9/11. this has consequences. if consumers do not spend, businesses will not prosper and hire more workers. if businesses are not hiring, our economy will not grow. it is that simple. we must do all we can to restore confidence and not only the financial system but also in our ability as a country to tackle long term challenges in a responsible, bipartisan manner. in addition to congress acting on a deficit reduction plan
that's balanced and promotes job creation, there are things this committee can do to help achieve these goals. from workers oversite to confirming well qualified nominees to reauthorization laws to reach consensus on the future of housing finance, there are steps this committee can take to promote consumer confidence, provide business priority to move forward with long term plans and strengthen our economic recovery. chairman bernanke, i look forward to hearing your views as both the fed and the congress pursue policies supporting our nation's economic recovery. i now turn to ranking member crapo. >> thank you, mr. chairman. today we will hear from our federal reserve chairman, ben bernanke, who will testify on the fed's monetary policy and
the state of the economy. mr. bernanke, i want to thank you at the outset for your on-going initiatives to improve transparency of the federal open market committee. because so much is at stake for the u.s. economy, the fed has the responsibility to make as much information available to the american people as possible on its actions. i also thank chairman bernanke for his steadfast reminder to us that one of the most important risks to our economy is our fiscal situation. i completely agree with him. that's why i've consistently said the fiscal reform and economic growth should top the list of our priorities in congress. we need to address the federal spending problem, reform our badly broken tax system and promote a sustainable economic recovery that will result in increased jobs. unfortunately with the fiscal cliff deal completed, some officials are looking for an easy way out by claiming our fiscal problems are nearly
solved. nothing could be further from the truth. our economy contracted in the last quarter. our unemployment rate remains far too high. medicare will be insolvent in just over ten years, and social security will be insolvent after that. until we take specific steps to reform our entitlements and make them solvent for generations to come and reform the tax code to produce significant, sustained economic growth, our fiscal problems are far from solved. in addition to our own fiscal situation, the on-going fiscal crisis in europe also presents substantial risks to our economy. in response to unsustainable fiscal policies here and abroad, central bankers throughout the world have turned to unconventional monetary policies over the past few years. near zero interest rates, large scale asset purchases, and record size central bank balance sheets have become the norm.
however, some authorities have become increasingly concerned that the cost of prolonged, easy money policy outweigh the benefits. in its annual report released last june, the bank of international settlements laid out the risks entailed with the worldwide expansion of central bank balance sheets and their extended low interest rate policies. not only did the report conclude that such actions may delay the return to a self sustaining recovery, but they create longer term risks to central bank's credibility and operational independence. more recently, the minutes of the federal open market committee's january meeting showed that several fomc members expressed concern that the feds' prolonged easy money lending policies could threaten the financial stability of the united states. these concerns warrant serious consideration, given the scale, scope, and duration of the fed's unconventional monetary policies. the fed has kept the target range for federal funds rate at
0 to .25% for more than four years. engaged in multiple rounds of asset purchases referred to as quantitative easing. the fed is buying $40 billion of agency mortgage backed securities per month, and $45 million of treasury securities a month for a pace of $85 billion or an annualized base of more than $1 trillion. and primarily, as a result of large scale asset purchases, the fed has ballooned its balance sheet to more than 3 trillion dollars and growing. i look forward to hearing from chairman bernanke about the concerns raced about the risk of the fed easy policies and why they can't overcome bad fiscal policy. i also look forward to hearing from chairman bernanke how uncertainty regarding dodd-frank implementation is hampering our recovery. in particular, what specific
legislative fixes can be achieved to remove this uncertainty. at the last hawkins hearing, he confirmed that regardless of bank intent, they view the plain language of the statute requiring them to impose some margin requirement on nonfinancial and users of derivatives, unless congress changes the statute. chairman bernanke also confirmed the fed is comfortable with an x police it statutory exemption. i look forward to hearing suggestions for other legislative fiksz to dodd-frank that could garner bipartisan support. these and many other issues are critical to us. i appreciate again, chairman bernanke, your attendance at this hearing. >> thank you, senator crapo. this morning, opening statements will be limited to the chairman and ranking member to allow more time for questions from the committee members. i want to remind my colleagues that the record will be open for the next seven days for opening
statements, questions for the record, and any other materials you would like to submit. i would like to introduce the witness, ben bernanke, chairman of the board of governors of the federal reserve system, a position he has held since february, 2006. i thank you for being here today to testify on the monetary policy report to the congress. your written statement will be included in the hearing record. chairman bernanke, you may begin your testimony. >> thank you, mr. chairman, ranking member, members. i am pleased to present the federal reserve semiannual monetary policy report. i begin with a short summary of current economic conditions and then discuss aspects of monetary and fiscal policy. since i last reported to this committee in mid 2012, economic activity in the united states has continued to expand at a
moderate if somewhat uneven pace. in particular, real gdp is estimated to have risen at an annual rate of 3% in the third quarter, but to have been essentially flat in the fourth quarter. the pause in real gdp growth last quarter does not appear to reflect stalling out of the recovery. rather, economic activity was temporarily restrained by weather related disruptions and by transitory declines in a few volatile categories of spending, even as demand by u.s. households and businesses continued to expand. available information suggests that economic growth has picked up again this year. consistent with the moderate pace of economic growth, conditions in the labor market have been improving gradually. since july, nonfarm payroll unemployment increased by 175,000 jobs per month on average and the unemployment rate declined three-tenths percentage point to 7.9% in the same period. cumulatively, private sector payrolls have grown by 6.1
million jobs, since their low point in early 2010. the unemployment rate has fallen more than two percentage points since the cyclical peak in 2009. despite the gains, the job market remains generally weak with unemployment well above the longer run lower level. without a job six months or more, millions more would like full-time employment but are able to only find part-time work. high unemployment has substantial costs, hardship faced by the unemployed and their families, but also harm done to vitality and productive potential of the economy as a whole. lengthy periods of unemployment, underemployment can erode skills and attachment to the labor force or prevent young people from gaining skills and experience in the first place. developments that could significantly reduce productivity and earnings in the longer term. the loss of output and earnings
associated with high unemployment reduces government revenues and increases spending, thereby leading to larger deficits and higher levels of debt. the recent increase in gasoline prices which reflects higher crude oil prices and wider refine margins is hitting family budgets. however, overall inflation remains low. over the second half of 2012, the price index for personal consumption expenditures rose as an annual rate of 1.5%, similar to the rate of increase first half of the year. measures of longer term inflation expectation remained in the narrow ranges seen in the past several years. against this backdrop, the federal market committee anticipates inflation over the median term will likely run at or below its 2% objective. with unemployment well above normal levels and inflation subdued, progress towards federal reserve mandated objectives of maximum unemployment and price stability has required a highly
accommodate i have monetary policy. under normal circumstances, policy accommodation would be provided in the target for the federal funds rate, the interest rate on overnight loans between banks. however, as this rate has been close to zero since december, 2008, federal reserve had to use alternative policy tools. these alternative tools have fallen into two categories. the first is forward guidance regarding the fomc anticipated path for the federal funds rate. since longer term interest rates reflect market expectations for shorter term rates over time, guidance influence longer term rates and supports a stronger recovery. the formulation of this guidance evolved over time. between august 2011 and december, 2012 the committee used calendar dates to indicate how long it expected economic conditions to warrant exceptional low levels to the federal funds rate. and december 2012 meeting, fomc
agreed to shift to providing more explicit guidance how it expects the policy rate to respond to economic developments. specifically, the december post meeting statement indicated current range for the federal funds rate will be appropriate as long as the unemployment rate remains above 6.5%, inflation between one and two years ahead projected to be no more than.5% point, and longer term inflation expectations remain well anchored. closed quote. an advantage of the formulation relative to the previous state base guidance, it allows market participants to update monetary policy expectations more accurately in response to new information about the economic outlook. new policy serves to underscore to maintain accommodation as long as needed for a stable recovery and prices. second type of nontraditional
policy tool is large scale purchases of longer term securities. which like forward guidance intend to support economic growth putting downward pressure on longer term interest rates. the federal reserve engaged in several rounds of such purchases since 2008. last september, fomc announced it would purchase agency mortgage backed securities at a pace of $40 million a month. and in addition, beginning in january it would purchase treasury securities at initial pace of $45 billion per month. these additional purchases of longer term treasury securities replace purchases we were conducting under now completed maturity extension program which lengthened the securities portfolio without increasing its size. fomc said they will continue purchases until it sees improve in the labor market in the context of price stability.
the committee stated in determining the size, pace, composition of asset purchases, it will take appropriate account of their likely efficacy and cost. in other words, with all its policy decisions, the committee continues to assess program of asset purchases within a cost benefit framework. in the current economic environment, benefits of asset purchases and policy accommodation more generally are clear. monetary policy providing important support to the recovery, while keeping inflation close to the fomc 2% objective. notably, keeping longer term interest rates low helped spark recovery in the housing market and led to increased sales in production of automobiles and other durable goods. by raising unemployment and household wealth, for example, through higher home prices, these developments have in turn supported consumer sentiment and spending. highly accommodate i have monetary policy also has several potential costs and risks which
the committee is monitoring. further ex-tanks of the federal reserve balance sheet were to undermine public confidence in the ability to exit smoothly from accommodate i have policies at the appropriate time, inflation expectations could rise, putting the price stability objective at risk. however, the committee remains confident it has the tools necessary to tighten monetary policy when the time comes to do so. as i noted, inflation is currently subdued and inflation expectations appear well anchored. neither the fomc nor private forecasters project development of significant inflation pressures. another potential cause the committee takes seriously, the possibility that very low interest rates if maintained for a considerable time could impair financial stability. for example, portfolio managers dissatisfied with low returns might reach for yield by taking on more credit risk, duration risk, or leverage. on the other hand, some risk taking such as when an
entrepreneur takes out a loan to start a new business or an existing firm expands capacity is a necessary element of a healthy economic recovery. moreover, although monetary policies may increase certain types of risk taking, in the present circumstances they also serve in some ways to reduce risk in the system, most importantly strengthening the overall economy and encouraging firms to rely on longer term funding and reducing debt service cost for households and businesses. in any case, the federal reserve is responding actively to financial stability concerns through substantially expanded monitoring of risk in the financial system, approach to the supervision of financial firms that takes a more systemic perspective, and the on-going implementation of reforms to make the financial system more transparent and resilient. although a lochk period of low rates could encourage risk taking, continued close attention to such developments is certainly warranted. to this point we don't see
potential cost to the increased risk taking in some financial markets outweighing benefits to a strong recovery and more rapid job creation. another aspect of federal reserve policies that has been discussed is their implications for the federal budget. the federal reserve earns substantial interest on the assets it holds in its portfolio, and other than the amount needed to fund cost of operations, all net income is remitted back to the treasury. with the expansion of federal reserve balance sheet, yearly remittances tripled, with payments to treasury totalling $290 billion between 2009 and 2012. however, if the economy continues to strengthen as we anticipate and policy accommodation is accordingly reduced, these remittances would likely decline in coming years. federal reserve analysis shows that remittances to treasury could be quite low for a time in some scenarios, particularly if interest rates were to rise
quickly. however, even in such scenarios it is unlikely average annual remittances over the period affected by the federal reserve purchases will remain higher than precrisis norm, perhaps substantially so. moreover, to the extent that monetary policy promotes growth and job creation, resulting reduction in the federal deficit would dwarf any variation in the federal reserve remittances to the treasury. although monetary policy is working to promote a robust recovery, it can't carry the burden to the speedy return to economic health. the economy's performance in the near term and longer run will depend importantly on the fiscal policy. the challenge for the congress and the administration is to put the federal budget on a sustainable, long run path that promotes economic growth and stability without unnecessarily impeding the current recovery. significant progress has been made recently toward reducing the federal budget deficit in
the next few years. projections released earlier by the cbo indicate under current law, the federal deficit will narrow from 7% of gdp last year to 2.5% in fiscal 2015. as a result, the federal debt held by the public, including that held by federal reserve is projected to remain roughly 75% of gdp through much of the current decade. however, a substantial portion of the recent progress lowering the deficit has been concentrate near term budget changes which taken together could create a significant head wind for the economic recovery. the cbo estimates deficit reduction policies in current law will slow pace of real gdp growth by 1.5 percentage points this year, relative to what it would have been otherwise. a is significant portion of this effect is related to the automatic spending sequestration that is scheduled to begin march 1st, which according to cbo estimates will contribute six-tenths percentage points to
the fiscal drag this year. given the moderate pace of economic growth, this near term burden on the recovery is significant. moreover, besides having adverse effects on jobs and incomes, a slower recovery would lead to less actual deficit reduction in the short run for any given set of fiscal actions. at the same time, despite progress reducing near term budget deficits, the problem of long term fiscal balance has only begun. it will begin to rise latter part of this decade, reflecting in large part aging of the population and fast rising health care costs. to promote economic growth in the long term, fiscal policy makers have to put the federal budget on a sustainable long run path that stabilizes ratio of federal debt to gdp and given the current elevated level of debt, eventually places that
ratio on a downward trajectory. between 1960 and onset of the financial crisis, federal debt averaged less than 40% of gdp. this relatively low level of debt provided the nation much needed flexibility to meet the economic challenges of the past few years. replenishing this fiscal capacity will give future congress and administrations greater resource to deal with unforeseen events. to address near and longer term issues, congress and the administration should consider replacing the sharp front loaded spending cuts required by the sequestration with policies that reduce the federal deficit more gradually in the near term, but more substantially in the longer run. such an approach could lessen near term fiscal head winds facing the recovery while effectively addressing long term imbalance in the federal budget. finally, the size of deficits and debt matter, but not all tax and spending programs are created equal with respect to their effects on the economy.
to the greatest extent possible in the efforts to achieve sound public finance, fiscal policy makers shouldn't lose sight of need of federal tax and spending policies that increase incentives to work and save, encourage investments, and work force skills, advance private capital formation, promote research and development, and provide necessary and productive public infrastructure. although economic growth can't eliminate federal imbalance in the short run or longer term, a more rapidly expanding economic pie will ease the difficult choices we face. thank you, mr. chairman. >> thank you for your testimony. as we begin questions, i will ask the clerk to put five minutes on the clock for each member. chairman bernanke rks what is your assessment, please elaborate, of the sequester
impact on the economy in the short term if congress did nothing, and what would be the impact if congress manufacturers another crisis with a fight over the cr. >> mr. chairman, as i mentioned in my remarks, with respect to the sequester, the cbo estimates it would cost six-tenths percent of growth and equivalent of 750,000 jobs. it would be a dragon near term economic recovery. more broadly, all the actions adoreding to the cbo, drag of 1.5 percentage points which is significant. in that respect, i think appropriate balance would be to introduce these cuts more gradually and to compensate with larger and more sustained cuts in the longer run to address long run fiscal issues. as you note, there are a couple other issues this year, including the continuing
resolution and debt ceiling. again, i hope congress can work together effectively to address these issues with a minimum of uncertainty because the uncertainty itself, of course, is also costly in terms of the ability of private sector to plan to take risks and help grow the economy. >> housing is important to our economic growth. the fed is working on rules that will have a major impact on housing. chairman bernanke, do you agree with governor terillo nothing prevents qrm as being the same as qm, and what will you do to ensure new rules to not hinder mortgage lending. >> mr. chairman, as you know the qrm is required to be no more broad than the qm. so we've had to wait for the qm to be done before we could
attack the qrm process, although we put out previous proposed rule makings. the qm, of course, is intended to help consumers, qrm meant to try to strengthen the securitization market, different purposes. i would say responding to your question, the six agencies currently discussing the qrm consider the idea of making the qrm essentially identical to qm is a realistic option and one we are considering. >> thank you for your answer. also regarding bezel, ranking member crapo and i sent a letter on the potential of rules on insurance companies and community banks. i look forward to your response. chairman bernanke, there's an increased focus on cyber security in the united states, including within our financial system. fsoc noted issue in its annual
reports. what is the fed doing both with banks you supervise in your networks to strengthen financial data protection and enhance the cyber security of the financial sector? >> mr. chairman, as you know, your point is absolutely right that cyber security concerns the financial system have become more acute lately. since last fall, there have been a number of so-called denial of service attacks on banks which essentially flood the public facing websites and prevent the public from accessing their accounts, for example. these are obviously quite disruptive and problematic. the leadership on cyber security for the financial system is being taken on one hand by treasury and on the other hand by various intelligence and security agencies. the federal reserve is very much engaged in cooperating with these agencies, sharing
information, and working with our banks to make sure they have appropriate procedures and oversite in place to deal with such problems. but i have to say we don't have to press them hard, they recognize it is very much in their own interest to do whatever they can to prevent these attacks being effective. >> while some urge the fed to focus slowly on inflation which has been a bigger threat to our economic prosperity since 2007, chairman bernanke, unemployment or inflation, what is the most important step the fed has taken to promote maximum employment. >> well, senator, as you know we have a dual mandate given to us by congress that's entirely appropriate, congress should set our objectives and the federal reserve should figure out how to meet them. so we are interested both in
achieving higher levels of employment and maintaining low inflation and price stability. our monetary policy as mentioned in my remarks has been quite accommodate i have, in that respect, in essentially all other advanced economies. in doing so, we have obviously in the first instance provided support for the real economy and job growth, through strengthening housing, strengthening demand for automobiles and other durables. and i would note with inflation at or below the 2% target, our policies also had the effect of greatly reducing any risk of deflation, which at the moment doesn't seem like much concern. at certain times as inflation gets close to zero critical level, that risk increases. keeping inflation from going too low, i realize sometimes it is hard to explain to people why inflation that's too low is a
problem, but if it is too low, you run the risk of japanese style situation where a long deflation is a barrier to economic growth and stability. so our accommodate i have monetary policy hasn't traded off one of these against the other, it has supported both real growth and employment and kept inflation close to our target. we have many other things we do on the regulatory side and so on, but the monetary policy of course is the tool the fed has to address that mandate. >> senator crapo. >> thank you, mr. chairman, chairman bernanke. as you mentioned in your testimony, the fed is monitoring whether prolonged near zero interest rate policy could result in excessive risk taking and threaten the financial stability of the united states. i'm interested in what specific metrics you use to evaluate whether these risks are increasing. >> well, first, senator, we have greatly expanded our resources that we use in the monitoring
process. created a new office for financial stability. we are working intensely with the financial stability oversite council. so the amount of effort we put into this has greatly increased. our internal monitors report regularly to the board and report to the federal committee. so the discussion of monetary policy include extensive discussions of financial stability issues. the kind of metrics that are used include things like leverage, are people investing, taking on too much leverage, asset valuations out of line according to standard metrics? is interest rate risk or other kinds of risk too concentrated? as you know, of course, the fed is also a bank supervisor. we spend a lot of effort looking at banks and other financial institutions trying to ensure they have appropriate capital and liquidity, appropriately managing risk. there's a wide range of ways in which we look at this.
again, as i indicated, we are watching this carefully, to this point, and i think this is a view shared by others on the committee, while there are things we have to pay attention to at this point, they're not of sufficient concern that they outweigh the important benefits of trying to support a continued recovery. >> thank you. i probably would disagree with those conclusions. i know a number of my colleagues are going to get into this issue a little further. i'm going to go on because of shortness of time. i want to talk with you briefly about dodd-frank reform. if we are able to achieve some bipartisan consensus on steps to improve dodd-frank, what are some of the provisions you think need clarification or improvement for reconsideration? >> well, first as a general matter, senator, dodd-frank is a very big, complicated piece of legislation, addresses many different issues. i'm sure there are many aspects
that could be improved one way or another. i recall in fact that you, yourself had a bill five or six years ago on reform simplification which was a bipartisan effort to find ways to reduce costs without losing the purposes of the regulation, and i think something along those lines would be very doable in this context. federal reserve would be willing to work with you closely. in terms of specifics, we want to do the work, of course, but you mention in opening remarks the end user issue, clarity on what congress would like us to do about end users, for example. another area proving difficult is the pushout provision for derivatives. i think more generally, i think we all agree that the burden of regulation falls particularly heavily on small community banks which don't have the resources to manage those regulations very effectively.
so i would say as a general proposition we ought to work together to find ways to lower that regulatory burden on the smaller institutions. >> thank you, mr. chairman, and i appreciate your advice and your expression of willingness to work with us on these and others as we move forward to try to improve our regulatory climate. last issue at least that i'll have time for in this round, i want to talk about the crisis in europe. last week, the european union released europe union released the euro zone economy and they predict it will shrink the second year in a row and third in the last five. what specific risks does a long recession in europe present to the outlook to the u.s. economy? >> the risks we've been facing the last couple of years have been primarily financial, given uncertainties about stability of certain countries' sovereign debt. given the risk on/risk off
behavior of financial markets as news comes in about financial developments. european central bank has taken a number of important steps including most recently the outright monetary transactions which helped to bring down the sovereign debt yields for the more fiscally challenged countries. that's been helpful. there have been a number of other positive steps which generally reduced the financial stresses in europe. while that remains a concern, i think the financial stresses are certainly less today than they were over the last two years. at the same time, as you mentioned, even as the mngs stresses have moderated to some extent, the european economy and euro zone is in recession. unemployment is rising, not falling. and that affects us in a number of ways, partly through financial sector, but also
simply through trade. our economy prospers when we can export. european market is an important market for us. we noticed a decline in our ability to export to europe. so that's risk, as well. >> thank you. >> senator reid. >> thank you, mr. chairman for your testimony. over the last several years, the federal reserve has been providing systtimulus to the economy through qe-3. particularly on the serge of sequestration, it seems our fiscal policy is not complementary to your policy, in fact, contradictory. as you suggest in your testimony, if we could in the short run have a complementary policy, that would add jobs rather than subtract them short run, add growth, that we would do better in closing the
deficit, and in fact, provide an opportunity in the long run to solve some of these challenging problems. in addition, i'd like your comments, if we continue to sort of use austerity as our major approach, that i presume would complicate your ability, as you suggest you can do, to in a measured way move away from quantitative easing at the right time. could you comment on those points? >> as i noted again today, monetary policy is no panacea, no cure-all. we do not have the ability -- we can all disagree how powerful these measures are. i do think they are effective, but i don't think that they can offset the 1.5 percentage points of fiscal restraint we are seeing this year, for example. in near-term recovery, there is
a sense monetary and fiscal policy are working at cross purposes. having said that, i want to be clear i'm not in any way denying the importance of long-run fiscal stability. i just think that to some extent the fiscal policy decisions being made are mismatched with the timing of the problem. the problem is a longer-term problem and should be addressed over a longer time frame. to the extent possible and perhaps not entirely possible, to the extent possible does no harm with respect to the ongoing recovery. that's the kind of balance i hope congress will consider. >> so do i. in 2 maybe repeating myself is if our policies in the short run were complementary, that would
help the policy. >> i don't know it would be literally faster in the short run. you have greater growth, so those two factors might be going in the other direction. it is true you get less bang for the buck for a given cut or given tax increase because of the effect on short-term growth. so you would get a longer, and larger long-run deficit impact and do less damage to the growth process by looking at this over a longer time frame. >> thank you very much. let my quickly turn to another issue. that is the basl committee announced rules, allowing the use of mortgage-backed securities as liquid assets, et cetera. do you intend to follow that approach with particularly the cautionary words you gave today about risk-taking and adding leverage to the financial markets?
>> i think that will be our starting point. we need to start with the international agreement and ask ourselves to what extent do we need to strengthen et, customize it for the u.s. context? you have to remember unlike capital, liquidity requirements are a new thing. there was significant amount of discussion about about what was reasonable what might be the side effects in other markets and the like. there was a bit of iteration in terms of what the international agreement was. we will neat the international agreement and see whether additional steps are necessary. >> finally and quickly, the european situation. from afar it looks like their policies of austerity have not helped them grow at all. in fact, have complicated their
economic situation. is that a fair judgment? >> austerity is not the only problem. they have, obviously, high interest rates and a variety of other factors that are affecting their economies. but again, i would say that it is possible to achieve both objectives, short-term growth and longer-term fiscal sustainability with a more judicious combination of short-term and long-term fiscal adjustments. >> thank you very much. >> senator shelby. >> thank you. mr. chairman, welcome again to the committee. the balance sheet of the fed is $3 billion, is that about right? >> yes, sir. >> you said it then, didn't you? it's about $3 trillion. >> yes, sir. >> you studied the fed a long time before you ever came to the fed.
has there ever been of balance sheet close to that? >> i don't think so. >> no. okay. does it concern you how you might have to deleverage the balance she'd and will that be a challenge to the fed or could it be? >> senator, i should comment though the fed hasn't had a balance sheet this side, others have. >> they paid for it, too. >> depends on your point of view. the current japanese prime minister doesn't think they have done enough. >> what do you think? >> i think this he should try to get rid of deflation. i support their attempts to get rid of deflation. in terms of exiting from our balance sheet, we put out, a couple of years ago we put out a plan, we have a set of tools,
belts, suspenders, different ways we can do it. i think we have the technical means to unwind at the appropriate time. picking the exact moment to do it is always difficult. you want to withdraw the support at the right time, not too early, not too late. that is always a judgment call. in terms of the ability to get out and normalize our balance sheet, we have, again, a so the of tools which i would be happy to go into, if you like. which would allow us to normalize policy by selling assets or retaining assets and doing other things like raising the interest rates we pay on reserves. >> do you think you will grow to a $4 trillion balance sheet? >> we don't have a number. what we are doing is looking, tying our asset purchases to the state of the economy. we want to continue purchases until we see a substantial
improvement in the outlook for the labor market, conditional on inflation remaining stable. we are also, as i mentioned in my remarks, looking at the costs and benefits including the financial stability issues the senator alluded to. we haven't given a specific number, but we are certainly paying close attention to all these issues. he mentioned the transparency of the fed. we are having this debate in public. you may have noticed many members of the committee talk in public. we want everyone to understand we are looking at all these issues. we are taking them all into account and trying to do the right balancing of our objectives. >> is your portfolio public? >> yes, sir. >> it's public. in other words, the $3 trillion, value or whatever of your portfolio, it's public as to what securities you have and what they're doing, performing and nonperforming?
>> they are all performing, every single one. they are all treasuries and treasury guaranteed agency securities. >> just about all of them are treasury or treasury-related securities. >> by law we can only buy treasuries and treasury agencies. >> they are all performing right now? >> 100%. >> i just have a minute on basil 3. bring us up to date. this is a very important regulatory challenge for everybody. >> we put out a proposed rule on basel iii. we worked to those comments. we continue to talk to our international partners. we are planning to have a final rule out on basel 3. i can't give you an exact date but somewhere in the middle of this year.
with the aim to begin the beginning of implementation of bass he'll 3 during -- basel 3 during 2013. as far as we can tell with our stress test and measures, virtually every bank is on track to meet the basel 3 requirement. they are already at or about to reach the basel 3 capital levels. >> what about europe and their banks? >> europe is also in the process of implementing basel 3. their banking system is weaker, i think. it has strength in some in recent quarters. we are discussing with them some of the details of their plans, some of which differ from the international agreement, in our view, but they are also in the process of implementing this agreement. >> thank you, mr. chairman. >> senator schumer.
>> thank you, mr. chairman. first i want to welcome senator crepo as our new ranking member and look forward to working with you on the committee. to other members of the committee, welcome. it's a great committee with a great group. i hope we'll have a good, productive time under the chairman's leadership. okay. my first few questions are about sequestration. i want to talk about italy. estimates suggest letting sequester take effect could reduce the gdp by as much as 1/2 point over the remainder of the year. i first want to know if p -- i'm going to ask you a series. is that a fair estimate? instead of stopping sequestration, some have suggested letting the full amount of cuts take effect, but rearranging the cuts rather than
imposing them across the board. in your opinion, would this reshuffling mitigate the negative effect of gdp growth in any meaningful way this year or next? or would the net effect on short-term gdp be more or less the same since the total amounts of cuts would be the same? my second question on sequestration is this. it goes into effect friday. there's some debate about how quickly the cuts will take place and how quickly the impact on jobs and the economy will be effect. cbo says sequestration will cost 750,000 jobs. when do you think we'll start seeing the impact in the job market? the march job numbers, april, when? >> sure the cbo number, we get very similar results to that. that is a reasonable estimate. in terms of whether or not rearranging the cuts would be beneficial, they could be beneficial from the point of
view of more efficient allocation of the cuts or cuts that are more consistent with the preferences of congress, but that of course is a congressional decision. i have no input there other than to say i think the near term effect on growth would probably not be substantially different, if you did it that way. in terms of the effects on jobs and employment, the spending implications take place over a period of time. >> mr. chairman, you didn't answer the second one. regardless of the political preferences the congress might have, would the rearrangement if there is flexibility, affect economic growth in in i real way? if the cut level is the same. >> not significantly. it would be about the same, i think. >> gotcha. good. >> in terms of the impact, the sequestration takes place over time. furloughs take place over time.
spending cuts take place over time. i wouldn't expect to see a big impact immediately. i think it would probably build over a period of months. >> right. >> one of my colleagues, i don't want to steal his thunder, but at a meeting earlier, described it like the metaphor of the frog who jumps it into a pot and the water starts boiling. you don't start feeling it first, but if you stay in the pot, you will singe badly. is that a fair analogy? >> again, it would take effect over a period of time and in conjunction with other measures taken this year, as well. >> yes. thank you. next question's on italy. so the markets reacted quite nervously, shall we say, to the elections in italy and the idea that they might not be able to form a government or might form a government that would be less willing to go along with the present economic policies. my question is, a what do you
think of that? but b, more importantly, what is the exposure of our american financial institutions to italy's debt? how dangerous? let's take the worst case scenario and say they can't form a government and go through what greece or spain has. how big an effect would that have on the stability, not on the world economy, not on our selling to italy, but the stability of our american financial institutions? >> well, the market is reacting first and foremost to uncertainty. it doesn't know which way the italian government is going to go and how policies will be affected. i don't think -- i'm not an expert in italian politics. i don't think any of the candidates have outright rejected either staying in the euro or maintaining the policies that are being required of italy in order to continue to receive, in order to continue to be in
the euro zone, but again, there is a lot of uncertainty there to see what happens. italy is unusual in that its current deficits are not very large but has a large outstanding debt. there is a lot of italian debt held round the world. our assessments going back of say our banking exposure to italian and spanish debt is that it's moderate. that it would be meaningful, but it would not in itself, a writedown, for example, which i'm not forecasting in any way, would not inflict serious damage on our financial institutions. there are, of course, money market funds that lend a lot of funds to european banks, including italian banks. those are connected. the fate of those institutions is connected to the fate of the
fiscal situation. but again, i think the main effects would be more indirect. again, i want to emphasize this is totally hypothetical. serious concerns about say the ability of italy to remain in the euro would probably have much broader effects on other asset classes, stock market, bond yields around the world, bank stocks, et cetera. those effects would be more unpredictable and more concerning than probably direct losses and exposures in terms of italian debt holdings. >> thank you, mr. chairman. >> senator corker. >> thank you, mr. chairman. when the fed decided it would stimulate a global currency war, as it did, did you embark on that thinking our country's in trouble, the heck with everybody
else, or did you think it would leverage the wealth effect if everybody had to race to the bottom, i know the fed has been purposeful trying to create this sort of faux wealth effect. did you think it would multiply your efforts? and speaking to that, overall wealth effect, i know you all do calculations all the time, but could you tell us exactly what sort of the wealth effect is? the part of it that's not real. that if you were to stop doing what you do as it relates to monetary supply today, how much of a diminishment in national wealth would take place? >> on the first question, we are not engaged in a currency war. we are not targeting our curren currency. the q-7 said it is entirely inappropriate to use monetary policy to address their domestic objectives, in our case
employment and price stability. our position is that our expansionary monetary policies which are being replicated in other industrial countries, are increasing demand globally and helping not only our businesses, but also the businesses in other countries that export to us. so this is not a beggar thy neighbor policy. >> the wealth effect is something you have tried to stimulate here. i wonder if you could tell me how much wealth diminishment would take place if you were to, if you will, move away from the punch bowl? >> there would be some. i would point out if you look at the stock market, for example, that the so-called equity premium, risk premium is quite wide. stock prices by that metric don't appear overvalued given earnings and given interest rates. if interest rates went up some, that would have some effect on stock prices. but the point here is not to
create what you call a faux wealth effect. the point is to stimulate the economy, create some forward momentum in growth and employment, and that in turn shows up in earnings and that creates a genuine increase in wealth. same with house prices. >> so i think, i don't think there is any question you would be the biggest dub, if you will since world war ii. i think that is something you're rather proud of. we have a federal government spending more relative to gdp since world war ii. those are working well together and that the fed is actually purchasing large portion of the new debt issuances as we live beyond our means. so it's working very well in that regard. just wondering if you all talk at all in your meetings about the degrading effect that's having on our society and how it's basically punishing people who have done the right things
and throwing seniors under the bus and others that have saved money. do you all ever talk about the longer term degrading effect of these policies as we try to live for today? >> i think one concern we have is about the effect of long-term unemployment on people who don't have jobs for years. that means they're never going to acquire skills, never be a productive part of our work force. so the jobs part is very important. you called me a dove. maybe in some respects i am, but my inflation record is the best of any federal reserve chairman in the post war period or one of the best, about 2% average inflation. so we have worked on both sides of the mandate. we are trying to achieve a stronger economy. you mentioned the issue of savers. that is an important issue. i would just point out that if
we tried to raise interest rates from say current ten-year yield is 2%, if we tried to raise 3%, 4%, 5% while the economy was still weak, it could not be sustained. our economy is not weak enough to sustain high-yield returns to savers. we would throw our economy back into recession and have low interest rates like japanese do. the only way to get interest rates up for savers is to get a strong recovery. only way to get strong recovery is provide adequate support to the recovery. i don't agree with that premise. >> do you concern yourself with the whole notion being perceived, we watch regulatory capture take place here where basically the regulators ended up working for the people they regulate. we had t.a.r.p., which most people who voted felt like that was a needed thing during our crisis. then an easy money policy which allowed the big institutions to really reap tremendous benefits
in the early stages without doing anything. then you're getting ready, i guess, in a few years as you alluded to when interest rates rise to basically have to print money to sell securities at losses, and then pay interest on reserves which people have pointed out, and i think you all talked about, is going to be billions and billions of dollars going to these institutions that, again, you regulate. do you concern yourself at all with the fed being viewed as not as independent as it used to be and working so closely with many of these institutions you regulate? >> well, we are concerned about perceptions, true. none of the things you said are accurate. >> yes, they are. >> to take the case of paying interest on reserves in the exit, for example, that is number one that is beneficial for the tax payer because on the left hand side of the balance
sheet is reserves. on the right hand side is the securities we hold which pay a higher interest rate than the reserves. by doing that, we make a profit. that is not helping the banks. >> when you began to draw the.supply in, going to be very beneficial to these institutions. >> why? >> they are going to be yielding huge returns on their reserves as you pay -- >> we'll be paying market rates, exactly what they could get in the repo market. there is no subsidy involved. >> senator mendez. >> thank you, mr. chairman. thank you for your testimony. you mentioned the housing market. that being important, it's always been one of the drivers of our economic recovery. in that respect, senator boxer and i have reintroduced the responsible homeowner refinancing act, which would remove barriers to refinancing for borrowers with gse mortgages
and have a history of paying their mortgage on time. in the state of the union, president obama said too many families who never missed a payment and want to refinance are being told no and urge the congress to act. in that respect, could you discuss the benefit to both individuals and the national economy of enabling more families to refinance mortgages in today's historically low interest rates? >> well, on the side of the borrowers, if they are able to refinance, they will have obviously lower payments, lower debt burdens, and to some extent more income ability to spend. i guess the offset, the question on the other side is whether there are needed subsidies or other costs and how large those would be. that would be the trade-off i would look at. it's true from the borrower's point of view, being able to refinance at a lower rate is going to increase the chance you can stay in your house and
increase your income. >> wouldn't we be solidifying and entire universe of responsible, so far responsible borrowers to be able to ensure they can continue to be a responsible borrower, be able to avert any effort, any movement toward foreclosure, and create an economic stimulus? if i've been patching the roof on my house because i don't have the money to fully repair it and now i'm paying $300, $400 less a month, i would be able to spend that money in the economy and it would have a ripple effect. >> senator, i don't like to endorse specific legislative proposals. >> just the question in general of the possibility of refinancing at historically lower rates. >> again, from the borrower's point of view, that's clearly better. they'll have lower payments. they'll have more income, discretionary income, better
chance of staying in their house. the question is what implications would it have on the lender's side orafice' cal side? would there be money coming in from the government to offset it would be the question to look at. would it help borrowers? obviously, it would. >> with reference, you said in your testimony, the sizes of deficit and debt matter but not all tax and spending programs are created equal with respect to their effects on the economy. to the greater extent possible to achieve sound public finance, policy makers should not lose sight of the need of policies that increase incentives to work and save, encourage investments in work force skills, research and development and provide necessary and productive public infrastructure. with that view being you are statement, isn't sequester, which i did not vote for because
i saw exactly where we are going to be headed -- isn't the way sequester takes place totally in contrary to that view? >> so i'm asking congress -- i think there is a tendency, senator, when you're thinking about the budget and the deficit, just talk about total spending, total taxes, and i'm saying and i think it's consistent with your point, that it's also very important whether the tax policy is a good tax policy, whether the spending is productive spending that increases the productive capacity of our economy or achieves desirable social goals. i hope it's not too controversial to say i think congress ought to think carefully about how it taxes and spends to achieve the best outcomes it can. >> in sequester, you have across the board cuts. if you're in the private sector and you lost revenue, you try to make up that revenue or if you had to make cuts in your
business, you make it in accordance with what would pose you for growth again. might be in the context of one company human capital, another technology, whatever. across the board cuts are indiscriminate and don't have the balance you suggest is necessary. would that be a fair statement? >> that is fair. the question is, will the senate and congress be able to agree on how to replace the sequester with a different set of programs? if they can, obviously, they can find a better combination, obviously would be better for our economy. >> certainly would be more desirable, assuming that that agreement could be achieved, than a meat axe approach across the board regarding the issues you raise. how do you create policies that create incentives to work and save, encourage work force skills, capital formation and what not. >> i agree. >> thank you. >> senator toomay. >> thank you, mr. chairman and thank you, chairman bernanke.
i would like to follow up on the point that the senator from new jersey was making. i think, if i understood the gist of what he was saying, we might have a lot of agreement on this. that is whether we like it or not, it certainly, it's certainly possible and looks quite likely that the sequester will at least begin. as it is currently codified, it is without regard to any sense of what our higher and lower priorities in the various agencies would be affected. it's hard to imagine that's the optimal way to go about cutting spending. it's impossible for me to believe all spending is equally meritoriuos and every category in every agency has equal merit and priority. it seems the most sensible way to go about this would be to give some flexibility to the people who are closest to these
spending decision, the agency heads, the administration, omb, so they can at least make the cuts that are least disruptive. some cuts are more disruptive than others. it just seems it could be less disruptive to our economy if they had a chance to do this through a thoughtful process. than if it has to be done uniformly across the board. does that make sense? >> yes, sir. >> i wasn't going to get into this, but i have to strongly disagree with the notion we have some kind of severe austerity program that is about to kick in. we have a federal government that doubled in size the last ten years, 100% growth in total spending. the sequestration contemplates 2.5% budget authority reduction, which as you know, about half of that would be actually spent in this fiscal year. so we are talking less than 1.3% of federal spending in outlies that would be curbed. the fact is if the sequestration
fully goes into effect in fiscal year 2013, the federal government will spend more money than it did in 2012. it's hard for me to understand that as a draconian spending cuts and austerity. by the way, by my math, the actual outlay is a reduction that's equal to about 0.25% of gdp. how that has a disastrous impact on gdp growth escapes me. frankly, the idea we would postpone it and promise we'll make cuts in the future, i think the credibility of those promises would be worth zero. our economy would respond in a very adverse way because it would see that we have absolutely no willingness, no political ability to begin even the slightest imposition of fiscal discipline. i think that has very negative implications. my specific questions for you on monetary policy, mr. chairman.
you talked about the fact inflation has not manifested itself as a problem by conventional measures at this point. i take your point. to what extent are you concerned about asset bubbles? there are people who think we have bubbles in the works right now in treasury securities and agricultural real estate. some even in the equity markets. how do you know when there is a bubble? how concerned are you that this absolutely unprecedented monetary policy could manifest itself in appropriate asset appreciation? >> it is a concern. as i said in my remarks. we are approaching it two ways. first, we are putting a lot of effort into measuring, monitoring, assessing asset prices and financial activities. secondly, we are trying to make sure that, to the extent there may be some frothiness in a
particular asset class, that the holders of those assets are prepared to deal with the losses. for example, banks have twice as much capital today than they did a few years ago. we test them according to, we stress them according to different possible scenarios where asset prices move sharply and ask would they still be able to lend and be stable. >> i've got very little time. i acknowledge that, but i think you perhaps would agree it can be very difficult to know when a bubble is really forming and it's getting frothy as opposed to being driven by fundamentals. the other concern i have is you mentioned earlier in conversation with senator shelby and perhaps senator corker that you're confident you have the ability to unwind the very large balance sheet. no question you have the ability to unwind. what worries me is the impossibility of knowing the impact of the unwind. just the suggestion of maybe a
little bit more dissent than people previously thought existed precipitated a significant sell-off in equity as few weeks ago. what would be the impact of having to liquidate your holdings on the bond market, equity markets? >> we don't anticipate having to do that. we think we can -- >> not ever? >> we could exit without ever selling by letting it run off. we could tighten policy raising interest rates we pay on reserves. that would be one strategy, for example. we said we would sell slowly with lots of notice, and we will also be offering our forward guidance with rates so there will not be a shift in rates, expectations on the part of the market. we are giving a lot of thought to these issues. there is no risk-free approach to this situation. the risk of not doing anything is severe, as well.
we are trying to balance these things as best we can. >> thank you, mr. chairman. >> senator warner. >> thank you, mr. chairman. chairman bernanke, thank you for your work and efforts, as i think we all have some concerns to take extraordinary actions oftentimes because at least today it seems like we have failed to keep up our end of the bargain to put in place the kind of balanced, comprehensive, phased-in deficit reduction plan that you have called for and many of us worked on for years. i would add, as well, that every one of those plans from simpson-boles on had a revenue component substantially higher than the revenue secured on the in your year's eve deal. i would acknowledge all those had an entitlement reform component which have not been
part of the agreements to date. i want to come back at one level on the sequestration. i heard some of my colleagues say the hit to the economy sequestrations, which was set up to be the stupidest option possible, such an outrageous option that rational people would never allow it come to pass. we look at that top line number and its effect on the economy. one of the things i know you've got great folks who do analysis, whether you've been able to dig in at a level below beyond just the kind of top line cut to have it balance with some revenue additions, but to get to the level of granularity because of this across the board approach without prioritization, 975 separate line items, not of equal value to the taxpayer or our defense where we will be
costing the taxpayer more money by these cuts where we will be, in one case breaking volume contract purchases, not just on the dod side but other sides. cases where i had university president here today with me where nih grants that may have had three or four years worth of research, where the last year of research now cannot be let, and consequently all the previous work goes down the drain. we talk about the economic cost of furloughing individuals, whether you've been able to do the analysis to say what that down stream might mean when it's meat inspectors or poultry inspectors which might have a driving up of prices to consumers because not as much food gets to the grocery store. has your analysis taken on the extra added stupidity value built into this legislation?
>> i agree with a couple of previous speakers that a thoughtful approach would be better if agreed upon than across the board approach. we don't get into line items or specific programs. >> top line number is going to have an enormously detrimental effect and why we need balance. i would argue there is perhaps a stupid and slightly less stupid way. i think only digging into some of the, literally some of the absurdities that will take place and actually some of the cost the taxpayers are willing to occur under the guise of quote/unquote cutting is remarkable. i want to come back to a host of questions and my time is quickly going away, as well. two other items. a lot of conversation for those of us who have been wrestling with the fiscal issues on any historic basis.
clearly we are at historic spending levels, we are at historically low, last 50 years at least revenue levels. one of the things sometimes cited is, our goal ought to be a 50-year running average of what our revenues should be as a percent of gdp. i really wonder with the demographic bulge we have, with the aging of our population, even those of us who have been very strong opponents of major entitlement reform, do you think a backwards-looking 50-year historic revenue target is appropriate as an economist when you look at both our aging population and the kind of demographic bulge of the baby boom coming in, even with meaningful entitlement reform? >> the way i think about it in terms of debt to gdp ratio. as i mentioned in my remarks, we had a national asset of a 400%
debt to gdp ratio before the crisis. we lost a lot of that asset. given what's happening 10, 20, 30 years out, we should be trying to build up over the next decade fiscal capacity to deal with it. >> my time is up. would you say what that debt to gdp number should be? >> historically we haven't been at 75% any time since just after world war ii. if we can bring it down from here would be helpful. >> thank you, mr. chairman. >> senator coburn. >> thank you, mr. chairman for being here. just a comment on senator warner that the revenue passed was certainly less than what simpson-bowles agreed to, but that was used to lower tax rates to stimulate the economy, not to raise taxes and not stimulate the economy. what is outrageous is we have
not done anything to address our long-term problems. my colleague from virginia has been very effective in working across the aisle to try to accomplish that. my questions have to do with qe. is there diminishing return on your efforts at quantitative easing? in terms of its effect? >> that is a good question, one we debated. the first round in 2009 had some very substantial benefits in terms of market functioning. markets were in turmoil. our purchases helped calm markets and set the stage for recovery in financial markets. we don't have quite that situation today. on the other hand, there are things working in the other direction. for example, credit markets are more open today. banks are lending more today. so in some sense, the low interest rates could pass through more easily today than they could have a couple of years ago. it's a good question. we don't know exactly which way
it goes. i think, as i said in my remarks, there is pretty good evidence 3.5% mortgage rates are one of the reasons why housing looks like it's turning around. low auto loan rates are one of the reasons why car sales are up. whether it's bigger or less, i'm not sure whether it has positive benefits in terms of growth. >> now that we have japan duplicating some of our efforts in terms of qe to fight deflation, which i agree is a proper goal for them. they struggled with that for 20 years. do you worry at all now that the european countries have done a quantitative easing in effect, japan has done it, the bank of china has done it we have done it, that the competitive ratio or the competitive net competitive differences might divert away and we see this in terms of trade protectionism, in
terms of the international markets? >> first, senator, you make a good point. the fed is not at all extraordinary. in terms of balance sheets and long-term interest rates we are similar to a lot of other countries. as i was saying before, we don't view monetary policy aimed at domestic goals as being a currency war. it's not like putting tariffs on imports to beggar thy neighbor for the benefits of your domestic industries. all the major economies need support provide stimulus and extra aggregate demand, that's mutually beneficial. china depends on the strength of europe and u.s. as their export market. we, too, depend on other countries as a market for our goods. so this is a positive sum gain, not zero sum gain. >> there was some concern at the
last g-20 meeting in terms of this target of the yen being at 110 instead of 78 like it was 90 days ago or maybe longer. there is some concern that currencies can get out of balance. that will have a significant impact on trade. would you agree with that? >> there was certainly discussion of the issue. the emerging market economies, which are at full employment in many cases, are unhappy because low interest rates in the advanced economies give them a choice they don't like. either they have to accept low interest rates, which they feel causes inflation or problems in their own economy, or alternately they have to raise their exchange rate appreciate which hurts their export market this. he have had some concerns with accommodative monetary policy in advanced economies in general.
i don't think japan really raises a special case, not with standing the rhetoric -- of course, we haven't seen what they are going to do yet. they haven't officially appointed the new governor. presumably what they are going to do is monetary policy aimed at domestic objectives and not specifically at the exchange rate. >> one final -- you don't have to answer this, but if you would give me your thoughts, recent paper crunch time, fiscal crisis and the role of monetary policy, would you mind at some point in time giving me your thoughts on that? i think you've seen that. >> i will, but i think the main thing i would say, i want to be very clear, that the cbo agrees that the federal reserve's balance sheet policies are with very high probability going to be very significant boone to the taxpayer in terms of returns to the treasury.
>> senator murkily. >> thank you, mr. chair. thank you for your testimony. i want to start with too big to jail. we had the situation with hong kong, singapore, bank corporation, rsbc, where the united states decided not only not to investigate any individual, but not to investigate the bank as a whole related to money laundering, related to terrorist organizations and drug organizations. it's no small thing. northern mexico responsible for 40,000 deaths, terrorist organizations a threat to the united states. the too big to jail echos the fact we still have banks that are so large that we are concerned about creating any ripples. in this case it sends a message as well about future behavior. if current behavior, be it manipulation of the libor rate which had fines associated with
it, of too big to jail for money laundering, doesn't this kind of undermine in a way our international regulatory structure for financial institutions? >> i agree that no individual and no institution should be exempt from paying for crimes that they commit. on this particular case, we worked very closely with the department of justice. we cooperated in every way to give them information. in the end, the company paid a $2 billion fine. if it relates to the bigger issue you're thinking of, too big to fail, we also agree that is something that needs to be addressed and many of the parts of dodd-frank are intended to address that and we are pushing those as hard as we can. >> thank you. i think it does say to us we are a long ways from getting there if we are that concerned about any form of shaking us in these
large banks, but there is another aspect of this, too. it continues to tell folks that it's safer to invest, if you will in large banks than say community banks. community bank would have been shut down or investigated thoroughly. what i see in the economy in oregon, often the community banks are willing to lend into the local economies. they understand it better. they are more comfortable with it. they understand they may have relationships to know the competency of any individual company and so forth. is this sort of bias counterproductive to the overall health of our economy? >> absolutely. it means the playing field isn't level. there is not market discipline. there is too much risk-taking. getting rid of too big to fail is an incredibly important objective. we are working in that direction. >> thank you. i want to turn now to the fiscal cliff.
we had a drop in gdp in the fourth quarter of last year. do you share the view somehow that was in part attributable to the december 31st fiscal cliff? >> only incidentally. one of the factors that happened to contribute to the fourth quarter was the 22% annual rate drop in defense spending. it's possible that in anticipation of the sequester, for example, there may have been some changes in spending patterns. but as i said in my remarks, i think the fourth quarter was really a combination of transitory factors. i don't think it signalled any real change in the pace of the growth of the economy. on the other hand the pace of growth of the economy remains around 2% which is positive, but not as strong as we would like. >> now we are looking at the different items you mentioned, the debt ceiling, continuing resolution, the sequester, which does convey a feeling of
lurching from crisis to crisis. we heard of many companies put substantial money aside, they haven't reinvested, they had some very profitable years. is this style of being unable to get our act together and plan a year at a time in the traditional sense really shooting ourselves in the foot? >> i think so, senator. we have not been able to identify with accuracy the quantitative impact of uncertainty about policy. we certainly around the fomc table hear any anecdotes from business with reluctance to expand or higher not knowing what the situation will be. >> the volcker fire wall between hedge funds and banks that make loans still has not, the rule-making hasn't been
completed. we are well past the two-year mark headed to three years. does this need to get done so that institutions know what the appropriate boundaries are and also so that we can demonstrate we have the ability to pass laws and the rules that go with them and operate as a competent society? >> we would like to get it done and made a lot of progress on it. the issue at this point is that the volcker rule is really three or four different rules. the cstc, ftc and banking agencies each have volcker rule which applies to institutions they supervise. there is a strong sense we have that we would be much better served if those rules were closely coordinated and close to being identical as possible. i think the issues at this point are not the work we've done at the federal reserve, for example. the issues are find iing agreemt
and closure among the different agencies who are working on the rule. >> thank you. >> thank you, chairman. it's good to have new front of me. thanks for taking time. we have, we ask a lot of questions a lot of different ways. i'm probably not going to be any different, but let's give it a shot. we haven't passed a budget around here in four years. are you optimistic that some time in your lifetime we may pass another budget around here in washington, d.c.? let me ask you another question and you can answer them together. do you think we'll ever balance a budget, have a balanced budget in your lifetime? >> well, i would settle for stabilization of the ratio of debt to gdp, which is a slightly
less tough level. >> sounds like a no. >> it's easy to criticize, but the politics is very difficult. i understand there are a lot of different views, strongly-held views and it's not easy to come to an agreement. i don't think congress is not trying. i know you're trying, and i hope you can find the agreement to reach these important objectives. >> i think the sequestration issue we have in front of us on friday is a result of our lack of budgeting and effort to budget. i'm from nevada, if i'm putting money down, i put $100 down that sequestration comes and goes on friday. soon as that occurs, we get onto our budget committee mark-ups that are supposed to happen march 11th through the 15th. putting another $100 down that doesn't happen. then we are supposed to bring those bills down to the floor some time march 18th.
march 27th, government funding expire bass you we don't budget. i'm arguing that day comes and go and we have a big argument. i'm talking about the instability we have and how difficult does that make your job? >> it makes me job difficult, but also makes the economy's job difficult. again, as senator merkley, the uncertainty not knowing how policy is going to be developed, and what tax rates will be, what spending will be, what programs will be and which contractors will be receiving funding, et cetera. knows are important concerns. >> i know your policy is based on a monetary policy and also unemployment and employment. i have to believe our indecisiveness and inability to get things done is causing a lot of consternation. you made a comment and actually repeated this in this hearing,
that you'll continue, i want to go to quantitative easing, your purchasing of these assets will continue until substantial improvements in the outlook of the labor market in context of price stability. will you explain to me more indepth what that means? >> sure. we are going to be looking at a variety of variables. we'll be looking at payroll employment. is it strengthening? is the unemployment rate coming down? those are indications -- >> do you have a target? >> we do not have a specific target. we've given thresholds for our rate policy. we have not extended those to our asset purchases. the reason is a couple of reasons. one, there are a lot of other things happening in our economy like fiscal issues you referred to. in addition, we are paying very close attention as a number of you have mentioned, to the efficacy and cost of these policies. that makes it very difficult to
say this is the number we are going to achieve. so we are doing our best to communicate the criteria for action, but we've not been able to come to a specific number which encapsulates both the change and outlook for the labor market and assessment of cost and efficacy which is another part of the decision process. >> do you believe your asset purchases are causing any equity bubble? >> i don't see much evidence of an equity bubble. earnings are very high. equity risk premium is above normal. in other words, pricing, equity holders are still being risk-averse in their behavior. but again, we have a two-part plan. first is to monitor these different asset markets. the second is to try to
understand what would be the implications if we are wrong. what would happen? who would be hurt? what would happen to financial institutions? would there be broad knock-on effects if, in fact, some particular asset turned out to be in a bubble? we are trying to do both of those things. we do not rule out if these problems become sufficiently worrisome that th they would be taken into account in our monetary policy. >> mr.you. >> senator warren. >> thank you, mr. chairman. and i also want to say thank you, mr. chairman. this has been my first chance to say in public how grateful i am for your help in setting up the consumer agency and how helpful all the people were at the fed during the time of transition of the consumer functions. so thank you very much. i'd like to go to the question about too big to fail. that we haven't gotten rid of it yet. and so now we have a double problem. and that is that the big banks, big at the time that they were
bailed out the first time have gotten bigger, and at the same time that investors believe with too big to fail out there that it's safer to put your money into the big panks and not the little banks, in effect creating an insurance policy for the big banks that the government is creating this insurance policy. not there for the small banks. and now some economists, including an economist at the imf has started to document how much that subsidy is worth. last week bloomberg did the math on it and came up with a number $83 billion that the big banks get in what is essentially a free insurance policy. they borrowed cheaper than the small banks do. so i understand that we're all trying to get to the end of too big to fail. but my question, mr. chairman, is until we do, should those biggest financial institutions be repaying the american taxpayer that $83 billion
subsidy that they are getting? >> well, the subsidy is coming because of market expectations that the government would bail out these firms if they fail. those expectations are incorrect. we have an orderly liquidation authority. even in the crisis, we -- in the cases of aig, for example, we wiped out the shareholders. >> excuse me, mr. chairman. you did not wipe out the shareholders of the largest financial institutions, did you, the big banks? >> because we didn't have the tools. now we could. now we have the tools. >> but $83 billion says that whatever you are saying, mr. chairman, $83 billion says that there really will be a bailout for the largest financial institutions if they fail. >> no, that's the expectations of the markets but that doesn't mean we have to do it. we have to solve the problem, senator. i think we are really in agreement on this. too big to fail is not absolute.
there are spreads. there are credit default swaps saying there is some probability of failure. moody's and others have downgraded these firms they've taken down some of their government support ratings. but we have a lot more to do. i agree. i think that's a good debate to have. we're in complete agreement we need to stop too big to fail. >> it is working like an insurance policy. ordinary folks pay for homeowners insurance. ordinary folks pay for car insurance. and these big financial institutions are getting cheaper borrowing to the tune of $83 billion in a single year simply because people believe the government would step up and bail them out. if they are getting it, why shouldn't they pay for it. >> i think we should get rid of it. >> you were here in july and you said that you were -- you commended dodd/frank for providing a blueprint to get rid of too big to fail. we've now understood this
problem for nearly five years. so when are we going to get rid of too big to fail? >> well, some of the -- as we've been discussing, some of these rules take time to develop. the early liquidation authority, we've made a lot of progress on that. we've got the living wills. i think we're moving in the right direction. additional steps are needed, congress can discuss those but we have a plan and i think it's moving in the right direction. any idea about when we're going to arrive in the right direction? >> it's not a 0-1 kind of thing. it's over time you'll see increasing market expectations that these institutions can fail. i would make another prediction and predictions is always dangerous that the benefits of being large are going to be -- are going to decline over time which means some banks are going to voluntarily begin to reduce their size because they're not getting the benefit they used to get. >> i read you on this. i read your projections on this in your earlier testimony.
right now it looks like they are getting $83 billion for staying big. >> that's one study. you don't know whether that's an accurate number. >> okay. we'll go back and look at it if you think there's a problem with it, but does it worry you? >> of course. i think this is very important. i think we need to -- we are putting a lot of money into this. it's a prosecutor that we'blem very long time. i assure you that as somebody who spent a lot of late nights trying to deal with these problems and the crisis, i would very much like to have the confidence that we could close down a large institution without causing damage to the rest of the economy. >> fair enough. i know we're both trying to go in the same direction. i'm just pointing out that in all that space in between, what's happening is the big banks are getting a terrific break and the little banks are just getting smashed on this. they are not getting that kind of break. and that has long-term impact for all the financial system. >> i agree with you 100%.
>> senator ritter. >> thank you, mr. chairman. thank you, mr. chairman, for being here. my top concern is actually exactly the same as mrs. warren's. and i think that is a statement in and of itself. that there is growing bipartisan concern across the whole political spectrum about the fact -- i believe it's a fact, that too big to fail is alive and well. first of all in terms of the study, ms. warren cited the bloomberg calculations, but that's clearly not the only thing out there. there is an fdic study released in september that concludes that, quote, the largest banks do, in fact, pay less for comparable deposits. furthermore, we should see that some of the difference in cost funding cannot be attributed to
differences in balance sheet risk or any nonrisk-related factors. the remaining unrelated risk premium gap is on the order of 45 basis points. such a gap is consistent with an economically significant too big to fail subsidy paid to the largest banks, close quote. in addition, an imf working paper has attempted to quantify this subsidy. and it said the subsidy, quote, was already sizable, 60 basis points, as of the end of 2007 before the crisis. it increased to 80 basis points by the end of 2009, close quote. then we have the bloomberg quantification which was working off that imf work that was mentioned. and also a board member who says, quote, to the extent that a growing systemic footprint increases perceptions of at
least some residual too big to fail quality in such a firm, notwithstanding the pan plea of measures in dodd/frank and our regulations, there may be funding advantages for the firm which reinforces the impulse to grow, close quote. so my first point is not just one, you know, outlier study. given all of that, what specifically is in process in terms of regs, or should be put in process to counteract that? because my concern is even if this problem is solved two years from now, the entire landscape of american banking will be different by then, including a lot of solid smaller firms gone. and i think that's a real loss to our financial system. there's a three-part plan under dodd/frank. part number one is to impose
costs on large institutions that offset the benefits they get in the funding markets. for example, capture is charges, activity restrictions, liquidity requirements. living wills. a whole bunch of other things that impose greater cost and force the larger firms to take into account their systemic footprint. that's number one. number two is the order of the liquidation authority which we're working closer with the fdic and our foreign counterparts to find out how we'd take down a large institution without taking down the system. and part three is a whole raft of measures to try to strengthen the overall financial system so that it will be more credible that we could take down a large institution without bringing down the system. that's sort of the three-part plan. it's working to some extent. for example, even though u.s. banks are stronger financially than european banks, frequently u.s. banks have wider credit default swap spreads indicating a higher probability of actual failure because the differences between u.s. and europe in terms
of government proceeds government support. so that's the process. that's the plan. there have been additional ideas such as, you know, separate -- essentially doing glass/steagall again, separating the commercial banking and investment banking activities. we're doing that to some extent, for example, with the volcker rule, but i don't think glass/steagall by itself would be all that helpful because in the crisis, some of the firms that failed were straight investment banks and some of the firms in trouble were straight commercial banks. so i'm open to discussing additional measures, but the plan is to impose costs on the largest banks to make them internalize their systemic imprint to develop a liquidation authority and strengthen the overall system. and overtime that ought to improve the situation. but if it doesn't, i think we ought to consider alternative and additional steps. >> well, i'll let you -- in closing, i would really continue to encourage you all doing that
now and again, i think this is a bipartisan concern. i've expressed this concern and several ideas, for instance, with senator brown on the committee. the three components you described are understood by the market. in my opinion, they've been digested and valued by the market. and the market still says there's too big to fail. in particular, i would continue to urge you to revisit higher capital requirements beyond the marginally higher requirements that you have instituted so far for mega banks. and i would continue to urge you all to think of alternatives to basel 3 as well in the same spirit. thank you. >> thank you senator. >> senator?
>> chairman bernanke, thank you for coming here. when i first came to the senate, i was in the armed services committee and admiral mullen was asked what's the greatest threat the united states faces. i thought i would hear some military challenge. he didn't even hesitate by saying the debt of this nation is our greatest threat. i don't know if you shared that same thought. >> it is certainly an important economic risk, and i think it's very important that over the longer term that we develop a sustainable fiscal plan. no question about it. >> his assessment was it was the greatest threat we face. >> i don't know. there are many possible candidates for that. >> also, i know they talked a lot about sequestering today and we were talking back and forth, the consequences if we do and if we don't. the bottom line, sequestering came in to being because in 2011, summer 2011, we thought we
put a supercommittee together. if they didn't reach the goal they had a minimum penalty of $1.2 trillion across the board in defense and nondefense. us being -- we voted on that as a body. now we're looking for a way to get out of that saying it was too draconian and we shouldn't have done it but we did. but if we don't do it at all and negate that spent and promise a vote that we made for the public, what effect would that have on the market? i know i've heard everything about the effects it would have if we do it. what effects would it have on the mark fet we don't do it? >> my recommendation, of course, i can only recommend to you, it's obviously congress' decision how to proceed is a two-part recommendation. i think if you -- which is to look at both the short run and the long run. i think it's true that just cancelling the sequester would not be -- would not solve the
overall problem which is long-term fiscal issues. o if you cut the >> see this hearing in its entirety on c-span.org. we're going back to clip as the house is going to take the first series of roll call votes. arisen, the yeas and nays are ordered. members will record their votes by electronic device. pursuant to clause 8 of rule 20, this is a 15-minute vote on the motion to adjourn. it will be followed by five-minute votes on the motion to suspend the rules on house resolution 77 and the approval of the journal.
the chair will not proceed until all members have taken their seats. the gentlemen in the aisle. the chair wishes to reiterate the announcement of january 23, 2012, concerning floor practice. members should periodically rededicate themselves to the core principles of proper parliamentary practice that so are so essential to maintaining order and deliberatesy here in the house. the chair believes that a few of these principles bear emphasis today. members should refrain from trafficking in the well when
another, including the presiding officer, is addressing the house. a member should wear appropriate business attire during all sittings of the house, however brief your appearance on the floor might be. you know who you are. members who wish to speak on the floor should respectfully seek and obtain a recognition from the presiding officer, taking the time to do so in proper form . members should, including one minutes, proper form would be to ask unanimous consent to address the house for one minute. members should take care to yield and reclaim time in an orderly fashion, bearing in mind that the official reporters of debate cannot properly tribe two members simultaneously -- transcribe two members simultaneously. members should remark to the presiding officer and not to
others in the second person or to some perceived viewing audience. members should not embellish the offering of a motion, the making of a point of order or the entry of an appeal with any statement of motive or other commentary and you should be aware that such utterances can render the motion of request, point of order or appeal untimely. members should attempt to come to the floor within the 15 minutes as prescribed by the first ringing of the bell. the members should know that if a member is in the aisle, is in the chamber, they are entitled the right to vote. but as a point of courtesy to all -- each -- each of your colleagues, trying to be on time within the allotted time would help with the maintenance of the
institution. following these standards of practice will foster an atmosphere of mutual and institutional respect, it will ensure against personal confrontation amongst members or between members and the presiding officer. it will facilitate members' comprehension of and participation in the business of the house and it will enable accurate tran description of the proceedings. in sum, it will ensure the comity that elevates spirited celebrations above mere argument. the chair appreciates the attention of members to these matters. the unfinished business is the vote on the motion of the gentlewoman from michigan, mrs. miller, to suspend the rules and agree to house resolution 77 on which the yeas and nays were ordered. the clerk will report the title of the resolution. the clerk: house resolution 77, resolution establishing an academic competition in the
fields of science, technology, engineering and mathematics among students in congressional districts. the speaker: the question is will the house suspend the rules and agree to the resolution. members will record their votes by electronic device. this will be a five-minute vote. [captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]
the speaker pro tempore: on this vote the yeas are 411, the nays are three. 2/3 of those voting having responded in the affirmative, the rules are suspended, the resolution is aagreed to. without objection, the motion to reconsider is laid upon the table. pursuant to clause 8 of rule 20, the unfinished business is the question on agreing to the speaker's approval of the journal on which the yeas and nays were ordered. the question is on agreing to the speakerer's approval of the journal. members will record their votes by electronic device. this is a five-minute vote. [captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]
the speaker pro tempore: the chair lays before the house a communication. the clerk: the honorable the speaker, house of representatives, sir, in light of my recent appointment to the house ways and means committee, i hereby resign my position on both the house budget committee and the house committee on financial services. signed sincerely, congressmanry knacky. -- congressman rinacci. the speaker pro tempore: without objection, the resignations are accepted. the chair lays before the house a communication. the clerk: the honorable the speaker, house of representatives, sir, thank you for supporting my appointment to serve on the committee on
appropriations. i sincerely appreciate the opportunity to serve on the appropriations committee. i understand that in order to facilitate this appointment, i am required to resign from my current committee assignment. as a result, this letter is to resign my membership on the committee on transportation and infrastructure, the committee on natural resources and the committee on science, space and technology. thank you for your consideration. signed sincerely, andy harris, member of congress. the speaker pro tempore: without objection, the resignations are accepted. the chair lays before the house a communication. the clerk: the honorable the speaker, house of representatives, sir, this letter is to notify you of my interest of stepping down from the house committee on agriculture so that i can dedicate additional focus to my other committee assignments and legislative responsibilities. thank you for your thoughtful consideration of my request.
signed sincerely, steve southerland, member of congress. the speaker pro tempore: without objection, the resignation is accepted. for what purpose does the gentleman from florida seek recognition? >> a unanimous consent request. the speaker pro tempore: the gentleman is recognized. >> i ask that i hereby be the first sponsor of a measure originally introduced by representative emerson of missouri for the purposes of adding co-sponsors and requesting reprintings pursuant to clause 7 of rule 12. the speaker pro tempore: without objection.
the speaker pro tempore: the chair will entertain requests for one-minute speeches. the house will be in order. the house will be in order. for what purpose does the gentleman from pennsylvania rise? mr. thompson: mr. speaker, request unanimous consent to address the house for one minute and to revise and extend. the speaker pro tempore: without objection. mr. thompson: thank you, mr. speaker. mr. speaker, it's been almost 300 days since the house first acted to replace sequestration with targeted reforms that achieve the same level of deficit reduction without harming the economy. yet, the senate has failed to act. the administration states the commonwealth of pennsylvania is set to feel the impact of sequestration more than most
states, yet has offered no constructive plan forward. the house has put forward two concrete proposals for a commonsense path to deficit reduction that will not harm our national security and will not harm our fragile economic recovery. we all must make sacrifices in order to reduce the debt and fix washington where we can no longer spend $1 trillion more than we spend each year. this is a recipe for economic decline. spending is the problem. it's time for the president to stop campaigning and call when the democrat-led senate to act. no more 11th hour negotiations. no more necessary harm to families and small businesses. it's time for us to come together and work on serious solutions. i yield back. the speaker pro tempore: the gentleman yields back. for what purpose does the gentleman from seek recognition? >> i ask unanimous consent to address the house for one minute.
the speaker pro tempore: without objection. >> mr. speaker, last week i visited the institute, a cutting edge biological research facility whose work has contributed to san diego status as the number two life science cluster in the united states. at stalling i met a professor who leads a groundbreaking cancer research lab and bianca kennedy, a breast cancer survivor. in fiscal year 2012, san diego firms received $850 million from the national institutes of health. it's these types of investments that created hundreds of thousands of jobs and bolstered our economy and contributing to the quality of life. the immediate cuts to n.i.h. are 8.2% which is equivalent to the cut of $2.5 billion. this could result in the loss of 33,000 research-related jobs
in 2013, and $4.5 billion decrease in economic activity. let's work together to avert the sequester so we can continue to improve the lives of patients and lead the world in science and technology. i yield back. the speaker pro tempore: the gentleman's time has expired. for what purpose does the gentleman from minnesota rise? >> to address the house for one minute and to revise and extend. the speaker pro tempore: without objection. >> mr. speaker, i rise to congratulate the yizeta girls minorityic skiing program. they claimed the very top prize at the state competition earlier this month in northern minnesota. mr. paulsen: the coach was the key to the success but special congratulationses goes out to two who earned all-state honors at the meet. six students from the state
championship ski team also were members of the state cross-country running squad that captured a state championship title last fall. each of these student athletes, their parents and their coaches deserve praise for their dedication. it's an honor to represent such great student athletes and the school district. congratulations and i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. for what purpose does the gentlelady from maryland seek recognition? ms. edwards: mr. speaker, i ask unanimous consent to address the house for one minute. the speaker pro tempore: without objection. ms. edwards: mr. speaker, on this coming friday, march 1, we are going to see budget cuts that will devastate federal workers, programs, agencies and private sector contractors. these pending $85 billion in cuts for this fiscal year alone was intended to be so bad, just so horrible and cause such widespread damage that they were never intended to take
effect in the first place. and yet here we are with another self-inflicted wound as house republicans continue to ignore democrats' requests to find a sensible alternative. in maryland alone, sequestration will hurt families, including 800 children who will lose access to school readiness programs, 2,100 fewer children leaving life-saving vaccinations, 12,000 mothers and young children cut from women, infant and children programs, and 46,000 civilian private sector workers are going to be furloughed. and the list goes on in maryland and across the country. mr. speaker, make no mistake. the g.o.p., the republicans rule the house and they can stop these senseless cuts today. it's in their power and the power of the g.o.p. to stop the cuts that are going to cost 900,000 jobs and threaten economic recession. the american people deserve better. mr. speaker, with that i also ask unanimous consent to bring up h.r. 699, a balanced bill to
replace the sequester with spending cuts and revenues. the speaker pro tempore: under the guidelines consistently issued by successive speakers on page house 7, the chair is not going to do that unless it is cleared by house majority leadership. the time has expired. for what purpose does the gentleman from texas rise? mr. poe: i ask unanimous consent to address the house for one minute. the speaker pro tempore: without objection. mr. poe: mr. speaker, the sequestration is a bad idea. i voted no. the idea for the sequester came from white house advisors. the president quickly signed those sequester and made it the law of the land. now he has buyers remorse. the house, seeing the error of its ways, repented two times, replaced the sequestration with rational cuts. the president's siesta senate
went missing in action. however, rather than administer with a smidge less taxpayer money, the president blames others for his fate. this is in spite of his power to determine priorities in spending, so he says the sky is falling because his government cannot operate without more money. he does not have the ability to produce a balanced budget or cut back waste, duplication, inefficiency or fluff. as the sequester is upon us, it is time for the president to lead america and govern with less money. but the president only knows one way to rule, tax more, spend more and scare the people more. this is the inability to govern. and that's just the way it is. . the speaker pro tempore: for what purpose does the gentleman from nevada seek recognition? without objection.
>> mr. speaker, we now have only a matter of days to prevent serious dg to the u.s. economy by the so-called sequester. these mindless across-the-board cuts will hurt the country and my home state of nevada. mr. horsford: there's talk that these cuts won't be that bad. let me talk about one school in my district i visited last week. matt kelli elementary school. in terms of funding over 50% of its school allocation is title 1 funding. it's a high-achieve, five-star school, where teachers are doing the best they can with the little money they receive. but the sequester would hit them hard. they would have to cut back on full-day kindergarten, eliminate reading and math intervention programs for struggling student rerkstuse meals to hungry kids
and defund their family community center. this is a model school that is working hard to improve our students' academic achievement. now, as their reward, because some in this body can't come to agreement, congress will take a sledgehammer to their budget. the sequester is not fair to the children and families of my district, it is not about trimming fat, it's about the children and that's who we should focus on today in this house. thank you, mr. speaker. the speaker pro tempore: for what purpose does the gentleman from new york rise? without objection. mr. engel: the sequester looms, programs will be cut, people are going to suffer. what has this house done today urn the republican leadership? we brought up three bills, one of which is a motion to adjourn, and the other one is a vote on the journal. what a shame and what a
disgrace. i didn't vote for the sequester law. i thought it was not a good idea. but we have it. and the only way we're going to get away from it is if we have a combination of cutting spending and raising revenue. the president has said he wants to sit down with republicans and have a balanced bill and lose the tax loopholes for big oil and other people that have these loopholes that don't need it, let the people who can afford to pay more, pay a little more. it's cot got to be a combination. the american people want us to reach out and meet in the middle. unfortunately, the republicans have refused to budge. this is not good for the american people. this is not something we should be doing. close the tax loopholes on big oil, the american people want to see a compromise. i ask unanimous consent to bring up h.r. 699, a balanced bill to replace the sequester with spending cuts and revenue. the speaker pro tempore: the gentleman's time has ex-peered.
-- expired. as the chair previously advised, that request cannot be entertained. for what purpose does the gentleman from illinois rise? without objection. >> mr. speaker, we are just days away from an $85 billion sequester that will result in arbitrary, devastating cuts to our federal government. despite the looming deadline this house has not debated any alternative to protect programs that benefit this country's most vulnerable population, our seniors, our students, an our middle class. our fiscal house may be in disarray but targeted decisions, not wholesale cuts, are needed. this is the opportunity to come together for both sides to roll up their sleeves and find a way forward. this is a moment to take a balanced, measured approach to deficit reduction that reduces
spending thoughtfully and increases revenue responsibly. i know there's common ground between the sides but it won't be found unless togethering democrats and republicans, get to the table and prevent the across the board irresponsible cuts. no two programs are the same and no difficult decisions should be made without thoughtful deliberation. there is no excuse for not sitting down and bridging the gap. hardworking families everywhere are counting on it. i ask unanimous consent to bring up h.r. 699, a balanced bill to replace the sequester with spending cuts and revenues. thank you. the speaker pro tempore: the gentleman's time has ex-peered. as the chair previously advised, that request cannot be entertained absent appropriate clearance. for what purpose does the gentlelady from florida rise? >> to address the house for one minute. the speaker pro tempore: without objection. >> thank you, mr. speaker. here we go again.
we are facing a disaster because congress has created another manmade disaster. not congress, but house republicans have created another manmade disaster. ms. brown: i haven't talked with anyone from business leaders, children's advocates, aarp senior citizen group, no one thinks congress is doing a good job. last year, the republicans took $115 billion and handed it over to 6,000 of the wealthiest americans in the form of a tax cut. at the same time, they cut health care funding for needy children and their families. you know, i have a list of cuts and how they're going to affect from children to senior citizens to f.a.a., but you know what? you can fool some of the people some of the time, but you can't fool all of the people all of the time. in closing, i ask unanimous
consent to bring up h.r. 699, a balance approach bill to replace this cut and spending disaster. the speaker pro tempore: the gentlelady's time has expired. as the chair previously advised that request cannot be entertained absent appropriate clearance. for what purpose does the gentleman from texas rise? without objection. >> thank you, mr. speaker. i rise to speak out against the manufactured monster we know as sequestration. across the board cuts that hurt our economy and our families. in small town west texas, when there's a fire, everyone works together to put the fire out and no one focuses on how the fear starred or how the fire started until after the fire is out. here and now in washington, many folks are more focused on who is to blame for the sequester than trying to do anything about it or worse, they use inflammatory
rhetoric to add fuel to the fire. meanwhile, here's what texas is facing. 159,000 jobs lost. more than 16,000 air force personnel furloughed, hurting lackland air force base and loveland air force base. 11,000 employees at fort bliss who could be furloughed in el paso and the biggest threat to border security is sequestration. i represent the district with the largest border, del rio, eagle pass, presidio, and here, border patrol, over time -- overtime is canceled workers are being furloughed. if you thought the lines a -- at the border were long before, just wait. not having a vote this week is a decision by some in congress for decreased border security job loss and furloughs and it devastates local communities and the state of texas. thank you, i yield back. the speaker pro tempore: for what purpose does the gentleman from florida seek recognition?
>> thank you, mr. speaker. by direction of the house republican conference, i send to the desk a privileged revolution and ask for its immediate consideration. the speaker pro tempore: the clerk will report the resolution. the clerk: house resolution 82, resolved, that the following named members be and -- >> mr. speaker, i ask unanimous consent that the resolution be considered as read. the speaker pro tempore: without objection, the reading is dispensed with. without objection, the resolution is agreed to and the motion to reconsider is laid on the table. the chair lays before the house the following personal requests. the clerk: leaves of absence requested for mr. culberson of texas for today and ms. velazquez of new york for today. the speaker pro tempore: without objection; the requests are granted. under the speaker's announced policy of january 3, 2013, the
gentleman from michigan, mr. conyers, is recognized for 60 minutes as the designee of the minority leader. mr. conyers: mr. speaker, i ask that the house yield me as must have time as i my consume. the speaker pro tempore: the gentleman is recognized. mr. conyers: thank you very much. i am pleased to join in this special order, a bipartisan one, in which i recognize my judiciary colleague and former chairman of the judiciary committee, jim sensenbrenner of wisconsin, for joaning me in this discussion as well as congressman bobby scott of virginia. also a distinguished member of the judiciary committee and former chairman of the subcommittee on crime. members of the house, just days
before the edmund pettus bridge march from montgomery to selma, and by the way, congressman colleague john lewis is the only member of congress that was in that march, the supreme court will review congress' authority under the constitution to re-authorize the voting rights act specifically section 5 of that act. i believe, and i am confident the supreme court will and should uphold the constitutionality of congress' authorization of section 5 for three reasons. the first, protecting minority voting rights is a
constitutional imperative, that congress is required to enforce. when congress acts under the 15th amendment to the constitution, it acts at the zenith of its constitutional authority. the supreme court is consistent -- has consistently held tissue upheld congress' authority under the 15th amendment. the 15th amendment gives congress a mandate to eliminate racial discrimination and voting by appropriate legislation. after almost a century of ineffective protection for minorities and then the long wake of the civil war, congress took action to pass the 15th amendment. almost 100 years later, the voting rights, which included section 5. protecting minority voting
rights is something congress can do and this authority has been repeatedly affirmed by the united states supreme court. now for almost 50 years the supreme court consistently affirmed congress' authority to protect minority voting rights under section 5 of the voting rights act. legal challenges to section 5 are nothing new to congress and are nothing new to the court. legal challenges to section 5 of the voting rights act have routinely been made after congress has re-authorized temporary provisions. the supreme court first affirmed the constitutionality of section 5 in 1966. in the case of south carolina
vs. katzenbach. the supreme court upheld the voting rights act, including section 5. the court in that decision cited congress' careful study and the voluminous legislative history underlying the voting rights act as a basis for upholding it. during congress' most recent authorization of section 5 in 2006, both the senate and the house studied the continued need for section 5 by amazing an extensive record that totaled over 15,000 pages, spanned 20 hearings, and included testimony from a total of 96 witnesses representing interests ranging from federal and state executive
officials to civil rights leaders and others. those 15,000 pages were amassed by the house judiciary committee and the senate judiciary committee as well. congress paid careful attention to the court's decisions throughout the re-authorization process and acted consistent with them to the extent the law only after commencing the evidence strongly suggested widespread violations of the 15th amendment, which led to ample justification for congressional action. . the result on july 13, 2006, was the largest bipartisan vote in
voting rights act history with a vote of 390-33 in the house and unanimous passage in the senate, 98-0. although dicta from the courts and the decision in 2009, suggested that the burdens of section 5 may be unnecessary because times have changed. congress found that the evidence strongly suggests otherwise. while we have made progress, congress continues to find that racial discrimination in voting is still present and remains concentrated in those places covered by section 5. unfortunately, the methods of discrimination have also become more sophisticated. i believe that the court will
recognize what congress found in 2006, that the work of section 5 is not yet complete. the protections in section 5 don't solely impact our federal voting processes, but rather the breadth of section 5 extends to the most smallest cities and most centralized local government. when a voting change discriminates against local citizens, even at local levels, section 5 has the ability to halt the impact of discrimination. without section 5's strength to arrest the discrimination at the outset, the burden of remedying the discrimination would be on these local citizens. the facts in shelby county
versus holder further magnify the importance of section 5 to protect the voting rights of minorities. in the shelby case, the justice department rejected an electoral map drawn by a city in shelby county, which would have decreased the number of black voters from 70.9% to 29.5%. in this instance, section 5 preserves the ability of the american -- african-american community to elect their candidate of choice to the city council. shelby county, along with many examples examined by congress in 2006, highlights the importance of reauthorization of section 5 of the voting rights act. the constitutionality of the voting rights act is an important matter for the court
to consider and continue to review and is important to the democratic ideals of this country. we believe the supreme court holds much deference to the considered judgment of the people's elective representative. since congress continues to find racial discrimination and voting is present and remains concentrated in many of the places covered by section 5. we expect the united states supreme court to continue to declare that section 5 of the voting rights act is critical to protecting minority voting rights, all voting rights, well into the 21st century. and mr. speaker, i reserve the balance of my time. i would be pleased to yield. mr. sensenbrenner: mr. speaker,
i thank the gentleman from michigan for yielding. i was the principal author of the voting rights act in 2006, which did pass this house 390-33 and unanimously passed by the senate. the shelby county case concentrates on the constitutionality of section 5 of the voting rights act. and that is the section that requires preclearance of electoral changes in coverage jurisdictions. the plaintiffs in the shelby county case alleged that since things have changed since 1965, section 5 is no longer applicable. they're wrong. when congress considered in 2006 the extension of the voting rights act, including section 5, the constitution subcommittee of the house judiciary committee had probably the most extensive
legislative record in the history of this congress compiled. 12,000 pages on this side of the capitol. numerous hearings, numerous witnesses, including those who are opposed to section 5 and even those who were opposed to the entire concept of the voting rights act. every viewpoint was heard and the mountain of testimony, i don't think, can be equaled by any other issue that congress has discussed in my memory and maybe in the history of the republic. i want to make two points. the first point is is that all of that testimony very clearly shows that even in the years immediately prior to 2006, there were attempts at discrimination made mainly by local governments
to attempt to disenfranchise minority voters. and in fact, over 700 requests for preclearance were denied, i believe in the 10-year period prior to the hearings being held. so there are still attempts being made to disenfranchise minority voters and the congress found that. and that legislative record should be enough to persuade the court that those of us who are elected representatives of the people had a.m. will evidence to make a considered judgment on this issue. the second point that needs to be made is that right from the beginning of the voting rights act in 1965, there was a procedure that would allow a covered jurisdiction to bail out of section 5 coverage. and that can be done by showing
that there are no attempts to disenfranchise minority voters to the satisfaction of the justice department. a few jurisdictions have availed themselves of the bailout provision and have succeeded, and thus are no longer under section 5. but the plaintiffs in the shelby county case want to do is rather than going and presenting evidence that they are not discriminating anymore and saying that they qualify for the bailout, they want to go to court to throw the whole of section 5 out. it is like dealing with this issue with a blunder bus rather than with a rifle shot or a surgical strike. now if any of the plaintiffs in this case are clean, i believe that they ought to tell the court why they're going to court rather than using the provisions that have been in the law for
close to 50 years to bail out because they are clean. and when i was in law school, i was always taught that when you wanted to get equity, you ought to come in with clean hands. well, if you have clean hands, the bailout is made for you. and if you don't have clean hands, then the supreme court should tell you to go wash up. the court should uphold the voting rights act, should uphold section 5 as considered by congress and reauthorized and rule in favor of the government. and i yield back to the gentleman from michigan. mr. conyers: i thank the gentleman from wisconsin for his observations. and his continuing support of this very important act from the beginning. he was there when it started and he's still with it.
i congratulate you, sir. mr. sensenbrenner: i thank the gentleman. mr. conyers: mr. speaker, i'm very pleased now to yield to the distinguished the gentleman from virginia, bobby scott, a senior member of the house judiciary committee as much time as he may consume. mr. scott: thank you. and i thank the gentleman for yielding and i join the gentleman from wisconsin and the gentleman from michigan who are leaders of the voting rights act in 2006. they were there and have been fighting the battle for voting rights for a long time. the leadership in reauthorization was the gentleman from wisconsin and the gentleman from michigan and the gentleman from north carolina, mr. watt. mr. speaker, our right to vote is the very foundation of our democracy. the supreme court noted in west bury v. sanders in 1964 that no right is more precious in a free
country than that having a voice in the election of those who make laws under which, as good citizens, we must live. other rights, even the most basic, if the right to vote is undermined. from the initial passage of the voting rights act, congress has relied on an extensive record of discrimination in voting to remedy the expiring provisions. in the original enactment and subsequent reauthorization, congress has made sure that voting rights remedies are proportionate to the problems congress sought to secure. the gentleman from wisconsin and the gentleman from michigan made sure we listened to each and every witness. they had long hearings and heard all kinds of different schemes to undermine the right to vote and in the end, we reauthorized the voting rights act. as a result of the voting rights
act in 1964 and passed in 1965, but since 1964, the number of black elected officials has increased from a nationwide total of 300 in 1964 to over 9,000 today. the congressional black caucus grew from three prior to the voting rights act to 43 today. and the commonwealth of virginia, my home state, there were no african americans in the general assembly in 1965. now there are 18 members of the virginia legislative black caucus. clearly these numbers show that many of the provisions of the voting rights act have made a difference. section 5 is one of the voting rilets act's most important provisions. it requires planned changes in election laws to federal officials for prior approval. they have to show that the change is not have a discriminatory effect or intent.
the jurisdictions covered by section 5 were selected the old-fashioned way. they earned it. by implementing poll taxes, literacy tests and other schemes. tomorrow, the supreme court will hear a challenge to section 5 and shelby county v. holder, the challenge will be to try to eliminate the requirement for coverage jurisdictions to secure that preclearance from the department of justice or a federal court in washington d.c. they are arguing the current evidence of discrimination practices in jurisdictions is inadequate to support section 5. but the record of section 5 -based objections has shown that section 5 is needed. since 19 -- 2006, when we reauthorized the voting rights act, more than 750 objections
have been lodged by the department of justice to changes in election procedures through the preclearance provisions of section 5, finding that those 750 changes violated the voting rights act. those changes in election laws in the jurisdictions knew they had to submit to justice. just exactly what kind of changes would they have enacted if they hadn't been required to preclear their new laws? congresses bipartisan report in 1982 warned that without this section, discrimination would rehafe appear. without this section there would be no effective deterrent in passing discriminatory laws. section 5 offers relief that is not available. without section 5's relief, jurisdictions with a history of discrimination could pass discriminatory changes in their election laws and then the victim of the discrimination would bear the costs of
litigation and bear the burdenen of proof to overturn the law. if overturned, finally, then they could do another scheme and the process would start all over. if those impacted negatively by the discriminatory laws could not raise the money, they are just stuck with the discriminatory plan. a lot of these plans are inflicted a will the of these plans are inflicted on small counties where they don't have the resources to launch extensive litigation. it's unfair to impose on them the burden of protecting their voting rights when you know the covered jurisdictions have a history of discrimination. one of the problems with the elimination of section 5 is that once the small county, raise all the money, get the litigation, get a judgment and overturn it, the perpetrators of the scheme
already would have achieved their goal. they got elected. they were able to represent the area, cast all the votes. then in the end, when they're finally caught discriminating, they get to run as indumb bents with all the advantages of running from incumbency. the magic of section 5 is that the illegal scheme never go into effect to begin with. now there is a provision that the gentleman -- as the gentleman from wisconsin pointed out for covered jurisdictions to bail out if they feel they have stopped discriminating. but all it has to do to bail out is first prove that they haven't gotten caught discriminating in 0 years. now the process is simple. for those who have attempted to bail out, they've been able to bail out. there is no barrier, essentially no barrier from bailing out from under the provisions of section 5 other than that you couldn't have been caught discriminating in the previous 10 years.
striking section 5 will turn our country into a pre-1965 election system. at a time when america has staked so much of its international reputation on the need to spread democracy around the world, we must ensure its vitality here at home and preserve section 5 of the voting rights act. thank you, and i thank the gentleman from michigan for yielding and for all of his leadership in voting rights and civil rights over the years. >> i thank the -- mr. conyers: i thank the gentleman for his astute and precise evaluation of the continuing importance of section 5 to the voting rights act. how much time remains, mr. speaker? the speaker pro tempore: the gentleman has 37 minutes remaining. mr. conyers: i would now be
pleased to yield to the gentlelady from texas, ms. sheila jackson lee, as much time as she may consume. ms. jackson lee: i thank the gentleman for vutch -- very much and thank him for convening this bold, historic special order. it's historic because it's led by the honorable john conyers, who has walked the historic steps that generated the actual passing of the voting rights act of 1965. i think it is appropriate to put on the record again as we've done often, that mr. conyers is the only elected firm, certainly member of the united states congress that can claim that they were endorsed by dr. martin luther king jr. i know that the honorable bobby scott and myself admire that and have benefited from the deep knowledge that john conyers has on these important issues. i would offer in my brief commentary this afternoon, to
try to track the vitality of the voting rights act in a series of re-authorizations, that people can actually see that this is not legislation of whiners, this is not legislation that is not in love with america, does not believe in the freedom of america's values and choice and being able to vote unencumbered or not view the integrity of state election officials throughout the country. but it really is, if you will, a testament to the fact that laws can make things better. and actuality, the voting rights act is a codification of the 15th amendment that no one shall be denied the right to vote on account of race or color. that was a necessary amendment and followed in the tradition of the 13th and 14th amendment which provides for due process and equal treatment under the law, then, of course, the 15th amendment which says that the
vote is precious, it is so precious, and sometimes we forget that. that it was embodied in the bill of rights or in the context of a constitution. that the 15th amendment was in fact protecting the right to vote. so the voting rights act came as the leaders of this nation watched the deterioration of the right to vote in certain parts of this nation. and i would argue that that is true even today. we heard on the floor that there is a way to, in enence, move yourself out of the vote -- in essence, move yourself out of the voting rights act, by showing 10 years of, if i may say, with all due respect, 10 years of good behavior. but we have had incidents that impact school boards to governorships if you will, or school boards to state houses and school boards to congressional seats.
where there have been instances that required the intervention of preclearance under the voting rights act of section 5. i would venture to say that no one has been hurt by that. that it has only enhanced the opportunity to vote. in the state of texas, for example, in the last two years, there was an issue of purging voters. it so happened that those being purged were predominantly hispanic and african-american. in the last election, 2012rks the state of florida, was poised to purge some one million voters and through oversight of the department of justice, that was in essence stopped. in addition, we've had a series of what we call voter i.d. laws, which came about, were born, post -- were born post--- post, if you will, the election of 2010. and i will just quickly go through, i think i'm being called for a meeting. but in any event, those voter i.d. laws were determined
through preclearance to have a deteriorating effect on the vote of those who were needed to carry forth a vote. and so i would make the argument that the voter i.d. laws were in essence prevented from taking the vote away under the 15th amendment of the voting rights act because we had section 5. so the texas voter i.d. law was declared it did not meet the standards under section 5 preclearance, it would hamper people to vote. in essence, it hampered people to vote because it did not have the process to become, to get your voter i.d. in all the counties in the state of texas. if you were in a county without a place to get your voter i.d. if you didn't have the money, you were clearly prevented from voting. that covered voters from all different races. voter i.d. laws that happened in mississippi, voter i.d. laws that happened in ohio, some of them were undone through
election processes but the preclearance truly impacts real lives. i remember as aor member of the southern christian leadership conference, which i worked for, doing registration in the deep south as it was defined in those years, in south carolina, going on to plantations where sharecroppers worked and the intimidation of the process of not only registering but voting. we were there to register to vote. the reason i know there was intimidation because as i was approaching a voting station, which was a tattered area, when i say tattered, the voting booth was a tattered cloth to an old general store, my commentary is not to speak of that particular era of voting but it was to say to you i was shot at for approaching. i was a stranger, and the next thick i knew we were running for cover. all i was coming to do was to check the voting process out, to ensure that our employees of
that plantation, sharecroppers, were coming and could vote unencumbered. the voting rights act is about unencumbered voting. what person would want to deny that? tomorrow we will have a hearing before the united states supreme court in the shelby case. my argument, i'm not making the argument before the supreme court as we speak today but my argument is facts will speak for themselves. the courts will address the question of law and they will listen to the proponents and opponents 6789 i hope and pray that the justices will understand hat underpin offings the argument are based on fact. in the last election of 2012, there was an enormous mountain of fact that showed in the nooks and crannies of america there were voters denied the right to vote. in 2008, voters were denid right to vote. issues such as moving various polling police stations -- places in minority neighborhoods, the misrepresentation of the facts
that felons would be arrested, or people being i.d.'d as felons who were not felons. this is a factual basis for which we need this. the fact that we have had these kinds of incidents shows ethe value of the voting rights act, and we show that value through 15,000 pages of documentation in the 2000 and 2006 re-authorization led by this judiciary committee of which those of us on the floor today are members of, led by john conyers and of course mr. sensenbrenner. let me conclude by thanking the chairman for his kind yielding and i ask the speaker to -- for unanimous consent to put my entire statement into the record . the speaker pro tempore: without objection. ms. jackson lee: i thank you. and to indicate that we can speak about the four points of
section five, the supreme court cases that reaffirmed it but this is a question of facts. until we eliminate the facts across america that people are denied the right to vote on the basis of color or their race, then we have a reason for section 5 preclearance. with that, i yield back in the name of freedom, in the name of justice, in the name of those who lost their lives fighting for such and fight -- for justice and fighting for america. i yield back. mr. conyers: mr. speaker, i want to thank my colleagues, mr. sensenbrenner, mr. scott, and ms. jackson lee, for their contributions. we have no further requests for time and under those circumstances, i yield back the balance of my time. the speaker pro tempore: the gentleman yields back.
weeks ago, america lost two more heroes. -- heroes and dedicated first responders. on those date the bryan fire department responded to a fire at the knights of columbus hall in bryan, texas. this blaze was fierce and ultimately the roof collapsed, taking the lives of lieutenant eric wallace and lieutenant gregory pritchard. in addition, other firefighters were critically injured in the operation. lieutenant gregory pickard was born in oklahoma and made his way to the great state of texas. he was a 32-year veteran of the bryan fire department. in those 32 years, he served our community through one of the darkest days of our community, the collapse of the bonfire at texas a&m university. lieutenant pickard served as commander during the search and rescue of the victims and
ultimately the 12 fallen students. he rose through the ranks and served as ba tamian chief from 1999 to 2005 before choosing to step back to lieutenant to fin herb out his career. he obtained his advanced firefighter certificate and was a leader inest establishing many of the current bryan fire fighting department operations. lieutenant eric wallace was born here in our nation's capital and just like lieutenant pickard, eventually found his way to texas. he also adapted quickly to our texas culture and became an avid hunter. he was a 13-year veteran of the bryan fire department and in 2010, he received an award for bravery during a fire in 2009 from the 100 club. on february 20, i attended the memorial service for both of these honorable men and stood with their families and friends and their fellow first
responders and the hundreds of citizens in attendance to honor and recognize these local heroes. we all mourn and yet we celebrate the lived of both of these great men. on february 21 and february 22, lieutenant eric wallace and lieutenant gregory pickard were laid to rest in marlin and bryan, texas. our thoughts and prayers are with the families and friends of lieutenant wallace and lieutenant pickard. they will forever be remembered as outstanding firefighters, as husbands, and devoted fathers. we thank them and their families for their service and sacrifice for our community. also, our thoughts and prayers are with firefighters ricky manti jr. and mitch moran who were critically injured during the fire. we pray our heavenly father will give them a speedy recovery and comfort their families.
>> mr. lew's skill and eggerness in getting perks is whether he appreciates who pays the bill. when asked basic questions like what interest did you pay on your mortgage, mr. lew could not remember. and of course, that doesn't pass the test. when asked about communications with stigroup about student loan kickbacks and he said he
couldn't remember any. he and the administration made it clear they had no intention of providing documents that might refresh his recollection and shed light on whether he was involved in these kickbacks. clearly these questions don't matter to them because they think they have the votes. but transparency and sunlight is essential for the american people. if mr. lew will not answer our questions now, why should we expect him to answer any questions if he is confirmed? that's unacceptable, and for these reasons i will vote no on that nomination. >> and the senate finance committee approved jack lew's nomination as treasury secretary today of 19-5. the nomination now goes to the full senate. the senate is holding a final vote on the confirmation of chuck hagel to be the next defense secretary. earlier today on a vote of 71-27, the senate ended a
republican filibuster setting the stage for that confirmation vote. 18 republicans joined 51 democrats and two independents to move forward with the nomination. the final confirmation vote on the senate floor vote now live on c-span2. federal chairman ben bernanke says the economy is still struggling with high unemployment. he delivered the semi-annual report to a senate committee and tomorrow he testifies before the house financial services committee. we will have it live at 10:00 on c-span3. >> on route 66, people were traveling either traveling for fun or looking for a job. maybe they were on their way to the grand canyon or to work in the agricultural fields in california. at first route 66 was just a way to get somewhere. your destination was out in
california. but later on after all these snake pits started blossoming up, tourist traps, motels and the trading posts, indian trading posts, when they started springing up, it became look a big amusement park. it wasn't like can we go to the beach in california, it's like dad, can we go down route 66. it's like a big long amusement park. >> get your kicks on route 66 in albuquerque, new mexico, one of the places you will see on book tv and c-span's local content vehicles look behind the scenes of the history and literary life in albuquerque march 2 and 3 on c-span2 and 3. >> president obama today called on congressional republicans to compromise with democrats to
avoid automatic spending cuts during the sequestration. the cuts are set to begin on friday. the president highlighted how the middle class will be affected from those cuts. from newport news, virginia, this is 25 minutes. [cheers and applause] >> hello newport news! [cheers and applause] >> well, it is good to see all of you here today. i want to thank your c.e.o. for showing me around. i usually don't get a chance to hang out with nuclear submarines, especially submarines that my wife has sponsored. so right there, that was worth the trip. but most importantly, it's a great chance to see the incredible men and women who every single day are helping to keep america safe and are just the bedrock of this country's
manufacturing base. thank you to all of you. [cheers and applause] >> i want to thank our outstanding secretary of the navyy. [applause] >> there he is right there. good-looking guy. i want to thank your mayor, mckinley price, who served his nation proudly. [cheers and applause] >> i want to thank two outstanding congressmen who care about this facility, care about virginia and care about the country. congressmen bobby scott is here. [cheers and applause] >> and congressmen scott rigell
as well. [applause] >> the reason i came here today in addition to seeing just some incredible stuff -- it's true, every time i come to these places, i don't know how you all do it. it is just amazing work. but the main reason i'm here is to call attention to the important work that you're doing on behalf of the nation's defense and to let the american people know that this work, along with hundreds of thousands of jobs, are currently in jeopardy because of politics in washington. in a few days, congress might allow a series of mediate, painful, arbitrary budget cuts to take place, known in washington as the sequester.
that's a pretty bad name, sequester, but the effects are even worse than the name. instead of cutting out the government spending we don't need, wasteful programs that don't work, special interest tax loopholes and tax breaks, what the sequester does, it uses a meat cleaver approach to gut critical investments in things like education and national security and life-saving medical research. and the impact of this policy won't be felt overnight, but it will be real the sequester will weaken america's economic recovery. it will weaken our military readiness. and it will weaken the basic services the american people depend on every single day. already the uncertainty around
these cuts is having an effect. companies are starting to prepare for layoff notice. families are planning to cut back on expenses. and the longer these cuts are in place, the greater the damage. so here, at newport news shipbuilding, you guys have made an enormous investment because we've said in order to maintain the finest navy the world has ever known, we want to make sure there is an orderly process whereby we are continually upgrading our ships, building new ships, maintaining our ships properly, and these are some big ships. so it's expensive. and it's complicated and you have 5,000 pliers all across the country. and you have to have some certainty and knowledge about how things are going to proceed over the long-term for mike and
others to plan properly. so you're rightly concerned. mike is concerned about the impact these cuts will have on not just this company, but companies and small businesses from all 50 states to supply you with parts and equipment. mike has told me you have already made $1 billion with a capital investment and you recruit and hire new people. those aren't commitments you make lightly. you have to have the capacity to plan and have some certainty in terms of what we're going to be doing. and you know that if congress can't get together and plan our nation's finances for the long-term, overtime, some of your jobs and businesses could be at risk. over the norfolk naval station, the threat of these cuts has forced the navy to cancel the de